In U.S. Domestic, revenue per piece rose 9.3% while total average daily volume (ADV) fell 3.3%, almost entirely the planned Amazon reduction; excluding Amazon, U.S. ADV actually grew. SMB ADV rose 4.3% to 34.5% of U.S. volume, and B2B held 43.8% of volume. Digital Access Program revenue reached $1.4 billion, a third consecutive quarter above $1 billion, and B2B DAP average daily volume rose 34% year over year. UPS said 68.5% of U.S. volume now moves through automated buildings, up from 64% a year ago, running about 28% cheaper per piece. Revenue per piece grew 130 bps faster than cost per piece this quarter, wider than the 50 to 100 bps spread UPS targets over time. Reported domestic revenue-per-piece growth is expected to moderate to roughly 4 to 4.5% in the back half, a comparison effect from lapping 2025 pricing actions, not a softening of pricing power. In the first half of 2026, UPS closed 45 buildings and cut roughly 30,000 operational positions; across the full 2025 to 2026 program, UPS expects to eliminate about 50 million operational hours, nearly 78,000 positions, and close nearly 150 buildings. Full-year guidance was raised to roughly $91.2 billion in revenue, $8.65 billion in adjusted operating profit, and $7.22 in adjusted EPS.
Fuel surcharge mechanisms did their job in the quarter: volatile fuel prices were largely passed through, so the net profit impact to UPS was modest. That pass-through shows up in the yield mix: fuel accounted for more than half of the 18.9% International revenue-per-piece gain, versus U.S. Domestic where fuel was the smaller share of the 9.3% increase and base rates/mix drove more. International revenue grew 12.5% despite a 5.8% decline in average daily volume; fuel alone reduced International operating margin by about 120 basis points, with added block hours and leased-aircraft costs from Middle East rerouting layering on further, unquantified pressure. China-to-U.S. volume returned to growth and Asia-to-Asia export volume rose 13.6%.
UPS's lower-cost network and continued focus on revenue quality support firm pricing overall, and broad-based discounting is unlikely. But leverage is customer-specific rather than gone: premium SMB, healthcare, B2B, and complex-logistics accounts remain UPS's priority targets, and because UPS is actively competing for that volume (with analysts on the call noting FedEx is pursuing the same premium volume, and UPS describing Amazon as strongest at the lightweight, short-zone, urban end of the market), those shippers may still have room to negotiate on capability access, dedicated resources, and multi-year terms even where base rates hold firm. Shippers with lightweight, short-zone, low-yield residential volume sit outside UPS's current priorities and face the most constrained environment, and carrier diversification matters most here.
UPS is modeling a roughly 24% sequential U.S. volume lift from Q3 to Q4 and has built an assumed holiday demand surcharge into its outlook. That is a planning assumption, not a formally announced 2026 peak surcharge, so shippers shouldn't treat it as settled. International lanes are rebalancing, but pricing flexibility on recovering lanes such as China-to-U.S. and Asia-to-Asia remains limited, and shippers should expect fuel surcharges to keep absorbing volatility rather than UPS eating the cost.
💡 UPS has completed its Amazon glide-down, removing about 2 million lower-yield packages per day since 2024, narrowing the window of transition-driven shipper leverage.
💡 Firm base rates and limited broad discounting should be expected; the expected slowdown in domestic revenue-per-piece growth to ~4 to 4.5% in H2 is a comparison effect, not weaker pricing power.
💡 Premium SMB, healthcare, B2B, and complex-logistics accounts remain UPS's priority targets and may retain meaningful competitive leverage given active carrier competition for that volume.
💡 Lightweight, short-zone, low-yield e-commerce shippers are least aligned with UPS's strategy and should keep alternative carriers viable.
💡 UPS's assumed ~24% sequential Q3-to-Q4 volume lift and holiday demand surcharge are planning assumptions baked into guidance, not a confirmed 2026 peak surcharge policy, so don't treat them as settled.
💡 Negotiate multi-year rate protection and explicit service/capacity terms rather than assuming UPS's lower operating costs will translate into lower customer pricing; fuel surcharges and Middle East-related costs remain a live pass-through risk.
