UPS's CEO said Thursday that it would reduce the number of Amazon packages it handles as profit from those shipments shrinks.
"This was not their ask," Carol Tomé said on an investor call. "This was us. This was UPS taking control of our destiny."
Shares plunged by as much as 18%.
The shipping giant said it would cut its business with its largest customer in half by June 2026. UPS's chief financial officer, Brian Dykes, said on the call that Amazon shipments made up about 20% of UPS's volume in the US. The company had reported fourth-quarter results before the stock market opened.
"Amazon is our largest customer, but it's not our most profitable customer," Tomé said on the call. "Its margin is very dilutive to the US domestic business."
Tomé said UPS used recent contract negotiations with Amazon to reach an agreement on the drawdown. She added that keeping the same amount of business with the retail giant would "likely result in diminishing returns."
"Due to their operational needs, UPS requested a reduction in volume, and we certainly respect their decision," an Amazon spokesperson told Business Insider. "We'll continue to partner with them and many other carriers to serve our customers."
Analysts at Goldman Sachs said on Thursday that while the move away from Amazon would cost UPS business in the short run, the company could use it to "focus in on higher-yielding, margin-enhancing volumes."
Tomé said that the remaining half of UPS's business with the e-commerce giant included handling some returns for Amazon — something UPS does "very, very well" and is unlikely to go away anytime soon.
"We have 5,200 UPS store locations that make it very convenient for customers of Amazon to return their Amazon packages," she said.
Amazon has spent years building its logistics services, including its warehouses and its aircraft fleet.
The company has used those resources to offer its own shipping options. Late last year, for instance, Amazon launched a new option for sellers on its website to deliver products from source factories to customers.
Amazon also offers shipping options to sellers who don't even sell on its website.
