UPS raised its 2026 revenue forecast to about $92.6 billion on Tuesday after third-quarter revenue rose 6.7 per cent to $22.9 billion, but it lifted its profit target by only $100 million, the company said in its third-quarter release.
It is the first quarter since UPS finished cutting the volume it carries for its largest customer, a reduction Carol Tomé, the chief executive, called the "Amazon glide down" in July. The year-on-year profit comparison looks weak and is not. The forecast is the more demanding part.
What did UPS report?
Higher revenue and, on the reported comparison, slightly lower adjusted profit. Adjusted operating profit was $2.05 billion, against $2.13 billion a year earlier, and adjusted diluted earnings were $1.69 a share, against $1.74. GAAP earnings were $1.37 a share after a net charge of $279 million, including a $182 million goodwill impairment in Supply Chain Solutions and $130 million of after-tax transformation costs. STAT Times reported the same figures.
"Given the strength we see in the business, we are raising our full-year financial guidance," Tomé said in the release.
Fewer parcels, more per parcel
The U.S. business is getting smaller and better paid. Average daily volume fell 3.3 per cent to 15.6 million pieces, while revenue per piece rose 6.1 per cent, so U.S. revenue rose 4.5 per cent to $14.9 billion. Adjusted cost per piece rose 5.5 per cent, to $13.32. The gap between those two rates is narrow, but it was enough to lift U.S. adjusted operating profit 14.3 per cent, to $1.03 billion.
| Segment | Revenue | Change | Adjusted operating profit | Change |
|---|---|---|---|---|
| U.S. Domestic | $14.87 billion | +4.5% | $1.03 billion | +14.3% |
| International | $5.01 billion | +7.1% | $746 million | +8.0% |
| Supply Chain Solutions | $2.98 billion | +18.2% | $274 million | -48.9% |
| Total | $22.9 billion | +6.7% | $2.05 billion | -3.7% |
Source: UPS release, 27 October 2026. The total profit change is this publication's arithmetic. Year-earlier adjusted profit includes a $330 million sale-leaseback gain in Supply Chain Solutions.
Supply Chain Solutions looks like the outlier: revenue up 18.2 per cent, mainly from forwarding and logistics including healthcare, and adjusted profit nearly halved. Most of that is the comparison. A footnote to the release says third-quarter 2025 adjusted results included a $330 million pre-tax gain on a sale-leaseback in that segment, worth 30 cents a share. Without it, by this publication's arithmetic, the segment's adjusted profit rose from about $206 million to $274 million, and company-wide adjusted earnings rose from about $1.44 a share to $1.69, about 17 per cent.
What does the new forecast assume?
A strong holiday quarter. In July, UPS guided to about $91.2 billion of revenue and $8.65 billion of adjusted operating profit. It now guides to $92.6 billion and $8.75 billion. By this publication's arithmetic, each extra dollar of forecast revenue brings about 7 cents of extra profit, below the 9.0 per cent adjusted margin UPS earned in the third quarter.
Adjusted operating profit for the first nine months was $5.48 billion. To reach $8.75 billion, the fourth quarter must deliver about $3.27 billion, close to the $3.3 billion UPS guided to, on revenue of about $25.7 billion. That is an adjusted margin of about 12.7 per cent, and 37 per cent of the year's profit from 28 per cent of its revenue. The fourth quarter is always UPS's busiest, so some of that is seasonal; how much is the question.
Where are the savings coming from?
Cuts. UPS says its Efficiency Reimagined programme delivered about $1.8 billion of savings in the first nine months and should deliver nearly $3 billion for the year. It expects $1.4 billion to $1.6 billion of related costs in 2026, mostly employee separation and consulting, including about $1.2 billion for its Driver Choice Program. The programme is not expected to finish until the fourth quarter of 2027.
Freight companies have been finding margin in pricing rather than volume this quarter: railroads leaned on fuel surcharges, and C.H. Robinson's purchase of RXO rests on promised savings. UPS is doing both.
What happens next?
The fourth quarter. The test is whether UPS can keep revenue per piece rising faster than cost per piece through peak season. If the U.S. spread narrows, the $3.3 billion quarter the guidance needs will be hard to reach.
All results, segment figures, volumes, cost per piece, charges, transformation savings, guidance and Carol Tomé's quotes are from UPS's third-quarter release of 27 October 2026, filed with the SEC; July guidance and Tomé's "Amazon glide down" phrase are from its second-quarter release of 28 July 2026. STAT Times' report of 27 October 2026 was used as a cross-check. The year-earlier figures excluding the sale-leaseback gain, the implied fourth-quarter profit and margin, the share of annual profit, the ratio of added profit to added revenue and the per-piece spread are this publication's arithmetic. The analysis is our own.
