By Abhinav Parmar and Lisa Baertlein
(Reuters) -United Parcel Service posted quarterly profit marginally below estimates on Tuesday and again declined to issue annual revenue and margin forecasts, deepening concerns that changing U.S. trade policy is weighing on the delivery giant.
Shares in the world’s largest parcel delivery firm fell more than 9% to $92.16 in early trading, after executives also said UPS will accelerate its plan to deliver fewer packages for Amazon.com, its largest customer.
UPS and rival FedEx are seen as bellwethers for the health of the global economy as they serve clients across industries and geographies.
“Changes in trade policies are impacting global trade and demand. It will likely all settle down at some point, but for now, it is a very volatile environment,” CEO Carol Tome said on the earnings call.
Tariffs on China and the elimination of duty-free treatment on purchases from China-linked e-retailers like Temu and Shein contributed to the 34.8% drop in average daily volume during May and June. The China to U.S. trade lane is UPS’ most profitable.
Still-uncertain U.S. trade policy has frozen corporate decision making and driven consumer sentiment to new lows, hurting the small package delivery business that UPS dominates.
UPS is now accepting retailer plans for its peak winter holiday shipping season when its daily volumes can easily double. In those plans, retailers signal expectations for consumer spending that underpins the nation’s economic activity.
Customers often submit preliminary peak season shipping plans by the end of August and final plans at the end of September, Tome said.
Tome expects retailers to delay preliminary plans until September, “which is an indication that they too are having difficulty in forecasting demand for the holiday selling season.”
UPS reported an adjusted consolidated operating margin of 8.8% for the latest quarter, while that margin was 7% for its largest domestic segment – below the 10%-plus analysts and investors had come to expect.
The company did not provide closely watched revenue and margin forecasts, citing ongoing macroeconomic uncertainty. In January, UPS projected 2025 revenue of $89 billion.
In a hit to demand, the White House in May began collecting tariffs on shipments under $800 from China that were previously duty-free, though the “de minimis” levies were later reduced to 54% from 120% as part of a trade truce.
Analysts at J.P. Morgan have previously noted that negative impact from the removal of the de minimis exemption seems to impact UPS more than FedEx.
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