The UPS Q3 2025 earnings confirmed that profitability is rising, but it’s being driven by price increases not volume growth. For parcel shippers, cost pressures are far from over.

Key Highlights from UPS Q3 2025 Earnings

• Profit up, volume down: UPS reported $2.1 billion in profit, a 10% margin increase, despite a 12% drop in domestic parcel volume.
• Revenue per piece up 9.8%: Yield growth remains the central strategy for offsetting declining volumes.
• USPS partnership revived: UPS confirmed a preliminary agreement with the U.S. Postal Service to relaunch last-mile partnership for Ground Saver and Mail Innovations in early 2026.
• Healthcare expansion: Healthcare remains a strategic vertical for UPS in 2026, with its acquisition of Andlauer Healthcare Group Inc. expected to be finalized this quarter. 
• SMB focus: Small and mid-sized businesses now account for 32.8% of UPS’s average daily volume, the highest share on record.

What the Numbers Mean for Shippers

The continued focus from UPS on per-piece profitability, coupled with ongoing network consolidation and cost-saving initiatives, signals continued upward pressure on fees in 2026.

The company is cutting costs aggressively, closing 93 facilities and eliminating 34,000 positions, to preserve margins. Those efficiencies, however, are unlikely to translate into lower shipping rates. Instead, they reinforce a strategy built around premium pricing and selective service optimization.

While the renewed USPS partnership may eventually reduce costs for UPS’s lower-margin products, most analysts expect the near-term benefit to impact the bottom line for UPS, not for their customers.

Healthcare and SMB segments remain bright spots, but are also areas where UPS may pursue targeted price adjustments and premium services.

How Shippers Can Prepare for 2026

With volume declines in core segments and continued emphasis on yield, UPS is likely to continue to adjust its pricing models, surcharges, and minimums in 2026. Shippers should take proactive steps now to strengthen their position:

1. Review carrier contracts early.
   Start discussions before UPS announces its 2026 GRI or additional surcharges.
   
   
2. Identify leverage points.
   Focus on volume concentration, service diversification, or industry verticals where UPS is seeking growth (healthcare, high-value parcel, or SMB).
   
   
3. Analyze surcharge exposure.
   Quantify your exposure to demand surcharges, additional handling fees, and residential delivery charges to protect margins.
   
   
4. Consult with a parcel pricing expert.
   Independent advisors like LJM can analyze your shipping contract to identify opportunities and strategic leverage to lock in stronger terms before 2026 pricing changes take effect.

Looking Ahead

UPS Q3 performance reflects a company in transition: leaner, more profitable, and increasingly selective about the business it pursues. The return of its USPS partnership and deepening investment in healthcare logistics suggest a recalibration of focus, not a broad return to growth.

For shippers, this means that negotiation strategy, cost modeling, and contract agility will matter more than ever in 2026. Those who prepare now will be best positioned to manage surcharges, protect margins, and align logistics strategy with business objectives.

LJM’s Executive Shipping Advisory continues to monitor carrier earnings and pricing trends to help shippers anticipate cost impacts before they appear in contracts.