United Parcel Service is restructuring its parcel network and shifting its growth strategy away from lower-margin ecommerce shipments toward higher-value business-to-business freight — a move that could have significant implications for wholesale distributors that depend on parcel delivery for parts, equipment, and replenishment orders.
The logistics giant is reducing its reliance on large ecommerce volumes, particularly shipments tied to Amazon, while repositioning its network to serve small and midsize businesses, industrial customers, and healthcare supply chains. UPS executives say the changes are intended to improve profitability and make the company’s network more efficient as it heads into 2026 and beyond.
UPS said it reduced Amazon-related shipments by about 1 million packages per day in 2025 and plans to remove another 1 million packages per day in 2026. The reductions will eliminate $5 billion in Amazon revenue over a two-year period.
“The portion of the volume that we’re exiting is really their FC outbound,” UPS chief financial officer Brian Dykes said during a presentation at the Raymond James Institutional Investors Conference, referring to shipments moving directly from Amazon fulfillment centers. “Amazon’s invested tremendously in their own supply chain. They can do that really well.”
UPS will continue to manage other parts of Amazon’s logistics network, including returns processed through The UPS Store network and shipments for small businesses selling through the Amazon marketplace, Dykes said.
For distributors, the company’s pivot could create new opportunities as UPS targets freight profiles that look more like traditional wholesale shipments — predictable commercial deliveries, higher-value products, and denser delivery routes.
UPS executives said the company’s future growth strategy emphasizes shipments from small and midsize businesses, B2B customers and specialized sectors such as healthcare logistics, where the company believes it can command stronger pricing and deliver higher margins.
“Less ecommerce, more SMB, more B2B, more healthcare,” Dykes said.
At the same time, UPS is undertaking what executives describe as the largest network restructuring in the company’s 118-year history. The company closed 93 buildings in 2025 and has announced plans to close another 24 facilities in the first half of 2026 as it reduces excess capacity and modernizes its operations.
The company also is investing heavily in automation to move packages more efficiently through a smaller network.
“When you pull this amount of volume down in a relatively fixed-cost network, you have to take the costs out,” Dykes said.
UPS said the restructuring will include eliminating millions of operational labor hours, reducing driver positions and consolidating sorting operations to align network capacity with its new mix of shipments.
For distributors, the changes could bring both benefits and challenges.
UPS’s growing focus on B2B freight could improve service reliability for commercial customers whose shipments move through denser delivery networks than residential e-commerce parcels. Industrial distributors shipping maintenance, repair and operations products, HVAC components or replacement parts often rely on fast parcel service for emergency replenishment and same-day shipping.
But the shift also signals that UPS intends to maintain strong pricing discipline.
The company reported revenue per piece increased 8.3% in the fourth quarter, driven partly by base rate increases and partly by improvements in shipment mix as lower-margin volume declined.
UPS has also begun returning some economy shipments under its Ground Saver service to the U.S. Postal Service for final-mile delivery. The move reverses a previous decision to bring those deliveries in-house and reflects improved service performance at the Postal Service, executives said.
The arrangement allows UPS to lower costs on some economy shipments but may result in longer transit times for certain low-priority deliveries.
Trade policy changes and shifting global shipping lanes are also influencing the parcel market. UPS executives said shipments moving from China to the United States have declined significantly following tariff changes, while other international trade lanes have expanded.
“Trade hasn’t stopped,” Dykes said. “Trade has just moved.”
For distributors importing parts or equipment from overseas suppliers, those shifts could affect cross-border delivery times and customs brokerage activity.
Overall, UPS executives said the company expects modest revenue growth in 2026 as the network transition progresses, with stronger financial performance anticipated in the second half of the year once restructuring costs begin to decline.
For wholesale distributors, the broader message is that parcel carriers are becoming more selective about the types of freight they want to move. Companies with predictable shipping volumes, higher-value products and commercial delivery destinations may find themselves increasingly attractive customers as UPS reshapes its network around more profitable shipments.
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