Good morning. Scaling back business with one of its largest customers was a gamble for UPS. Now, the company’s second-quarter results suggest that bet is starting to pay off.
The company reported on Tuesday revenue growth of 7.6% year over year in Q2 2026, alongside operating profit growth and margin expansion across all segments. For CFO Brian Dykes, the quarter marked a turning point.
“We finished the drawdown of that Amazon volume at the end of the second quarter,” Dykes told me, referring to UPS’s plan to scale down Amazon delivery volume. “You’re starting to see that show up in the results,” he said.
The strategy marked a major shift for UPS (No. 48 on the Fortune 500), which set out to move away from low-return, capital-intensive volume and double down on higher-margin areas like small and midsized businesses, health care logistics, and B2B delivery. That included the decision to halve its Amazon delivery volume after nearly 30 years of partnership, Dykes first told me last October.
The scale-down unfolded over six quarters and was paired with a broader effort to rightsize the company’s capital and capacity. Together, those moves helped drive both efficiency and profitability. UPS has achieved approximately $4.5 billion in cost savings over 18 months, largely tied to the Amazon pullback and network reconfiguration, with more to come in the remainder of the year, according to the company. UPS eliminated approximately 2 million pieces per day of lower-quality Amazon volume.
Lessons learned
With the transition largely complete, Dykes reflected on several lessons from leading one of the company’s biggest network transformations.
The first: speed matters.
“However fast you think you’re going, you’re not going fast enough,” he said, noting that’s especially true during a complex network reconfiguration.
Just as important was maintaining complete alignment across the leadership team.
“Carol obviously is a very strong leader,” Dykes said of CEO Carol Tomé. With just seven executives reporting directly to Tomé, Dykes said there was no room for ambiguity about the company’s direction.
Perhaps the biggest lesson was planning for the unexpected.
“Whatever bumps in the road you think you anticipate, you’re not going to get them all,” he said.
Over the six-quarter transition, UPS navigated multiple wars, tariff changes, and other external disruptions while simultaneously overhauling its network.
“All of that impacts our business,” he said. “We had to adapt to it in the midst of what was a pretty major network reconfiguration.”
His takeaway: “You have to anticipate the unknown—and leave yourself capacity in order to manage that.”
UPS views Q2 as a “pivot quarter,” signaling that the bulk of its network transition is complete and the focus is shifting to growth in higher-value segments.
Health care is central to that strategy. UPS has expanded its end-to-end cold chain capabilities, allowing it to manage everything from international pharmaceutical shipments to last-mile deliveries for hospitals and pharmacies. The company is also gaining traction in industrial markets, including automotive, manufacturing, and AI- and data center-related infrastructure.
Technology investments are supporting the shift. UPS now routes more than two-thirds of its volume through automated facilities, Dykes said.
Looking ahead, UPS raised its full-year outlook, citing strong first-half results and continued momentum. Dykes said a streamlined network, disciplined execution, and targeted investments position the company for its next phase of growth. Sheryl Estrada [email protected]
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