UPS reported third-quarter 2026 consolidated revenue of $22.9 billion, up 6.7% from a year earlier, and non-GAAP adjusted consolidated operating profit of $2.1 billion. GAAP operating profit was $1.7 billion, and non-GAAP adjusted diluted earnings per share were $1.69. UPS also raised its full-year 2026 outlook to about $92.6 billion in revenue, $8.75 billion in non-GAAP adjusted operating profit and $7.28 in non-GAAP adjusted diluted EPS.
UPS is trading package count for revenue quality
In its U.S. Domestic Package segment, revenue increased 4.5%, driven by a 6.1% increase in revenue per piece. International Package revenue grew 7.1%, driven by a 15.0% increase in revenue per piece.
The latest results build on a shift UPS has described in filings since 2025. The company told investors it was reducing volume from Amazon, identified in its 2025 Form 10-K as its largest customer, by more than 50% by June 2026 from 2024 levels. Amazon and its affiliates represented about 10.6% of UPS’ consolidated revenue in 2025, substantially all of it in U.S. Domestic Package.
That decision has made volume comparisons lower, but it has also given UPS room to focus on shipments it believes carry stronger economics. In its second-quarter filing, UPS said average daily package volume fell partly because of planned reductions from its largest customer and actions on lower-yielding e-commerce volume, while revenue benefited from higher-yielding volume and customer mix.
UPS said in its third-quarter release that the planned volume reductions from its largest customer were completed in the second quarter of 2026. The company is still working through its broader Efficiency Reimagined initiative, which it expects to continue until the fourth quarter of 2027.
Premium segments are filling more of the network
On UPS’ third-quarter call, executives pointed to small and medium-sized businesses, healthcare, high tech, manufacturing and other premium segments as growth areas. SMBs represented 35.1% of total U.S. volume in the third quarter, up about 240 basis points from a year earlier. U.S. SMB average daily volume grew 3.7% year over year, while global Digital Access Program revenue reached $1.4 billion.
The Digital Access Program is UPS’ channel for integrating its shipping services into platforms used by smaller merchants and online sellers. UPS said air services and ground commercial made up nearly 30% of DAP volume for the first time in the third quarter, which matters because those shipments can carry stronger economics than lower-yield residential e-commerce parcels.
Healthcare also remained central to the shift. Management said healthcare revenue exceeded $3 billion for the third consecutive quarter, with growth across every business segment. Supply Chain Solutions revenue increased 18.2% to $2.98 billion, primarily due to growth in forwarding and logistics, including healthcare.
A holiday test with fewer Amazon parcels
The fourth quarter will test whether higher-value shipments can keep supporting profit as holiday volume ramps. UPS expects fourth-quarter consolidated revenue of about $25.7 billion and non-GAAP adjusted operating profit of about $3.3 billion.
On the earnings call, management said average daily volume is expected to rise about 25% from the third quarter to the fourth quarter, roughly in line with last year’s seasonal increase. At the same time, U.S. average daily volume is still expected to be down slightly from a year earlier because of the Amazon drawdown, according to executive comments reported by Supply Chain Dive.
UPS is also adding services aimed at more sensitive shipments. Its new UPS Protected Delivery service, scheduled to begin Nov. 16, 2026, requires a secure PIN before release. UPS lists high-value and time-sensitive goods such as electronics, luxury goods, jewelry, apparel and collectibles as fits for the service, which is available in the U.S., Puerto Rico, U.S. Virgin Islands, Canada and select markets in Europe and Asia Pacific. UPS’ rate page says the service will cost $10.70 per shipment.
Efficiency is carrying part of the profit story
UPS’ profit strategy also depends on moving shipments through a more automated network. The company has been restructuring network capacity to match lower volume from its largest customer. In its 2025 annual report, UPS said its Network Reconfiguration and Efficiency Reimagined initiative reduced its operational workforce by about 48,000 positions, including 15,000 fewer seasonal positions, and closed daily operations at 93 buildings, 85 of which were permanently closed in 2025.
Those changes came with costs. UPS said third-quarter GAAP results included a net charge of $279 million, including $130 million in after-tax transformation strategy costs and a $182 million goodwill impairment in Supply Chain Solutions, partly offset by a $33 million gain on sales of MD-11 assets.
The company expects $1.4 billion to $1.6 billion in full-year 2026 costs tied to those initiatives, primarily for employee separation and third-party consulting. UPS excludes these costs from non-GAAP adjusted operating expense. UPS also expects nearly $3 billion in full-year 2026 benefits from the initiatives.
What the shift means for online sellers
The profitable growth UPS is highlighting is coming from shipments linked to air services, business customers, healthcare logistics, technology, security, data visibility and platform integrations. For e-commerce merchants and technology sellers, that points to a carrier market where margin, shipment profile and service complexity can matter as much as parcel count.
The practical effect may be a wider split between commodity shipping and value-added delivery. Businesses that ship higher-value goods, temperature-sensitive products or time-sensitive B2B orders may see more carrier options built around visibility and control. Sellers built around low-cost residential parcel volume may face tougher rate and service tradeoffs as carriers concentrate resources on freight they consider more profitable.
Financial measures described as non-GAAP are UPS’ adjusted measures, not GAAP results. UPS said some forward-looking guidance is given on a non-GAAP adjusted basis because it cannot predict all future items that would affect GAAP results.
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