UPS reports a 12.7% drop in supply chain revenue due to US trade policy changes, while forecasting growth supported by strategic acquisitions.
United Parcel Service reported a sharp decline in its supply chain division's fourth-quarter revenue as US trade policy shifts continued to weigh on international freight, reports New York's Journal of Commerce.
UPS stated that revenue in the segment fell 12.7 percent to US$2.7 billion, driven by lower rates in air and ocean forwarding and reduced parcel volumes to the US Postal Service. Operating income rose 16 percent, aided by the acquisition of healthcare logistics provider Andlauer and growth in reverse logistics and same-day delivery services.
The company's parcel business also experienced a decline in the quarter, as gains in international operations failed to offset decreases in US volumes and revenue.
Chief Financial Officer Brian Dykes informed analysts that the company faces 'extreme weakness' in its international business during the first quarter of 2026, citing higher US tariffs, threats to trade agreements with Canada and Mexico, and the end of tariff-free shipments under the de minimis exemption.
Mr. Dykes mentioned that UPS is shifting shipments from other Asian countries to the US, although margins are lower than those from China-to-US trade. He added that the company expects conditions to improve after May when tariff impacts ease, and again in September when de minimis changes are absorbed.
UPS forecasts high single-digit growth in its supply chain business in 2026, supported by the Andlauer acquisition. However, Mr. Dykes cautioned that first-quarter revenue will be flat, with a year-on-year decline in operating profit due to trade lane changes and tough comparisons with 2025.
Vice President Kathleen Gutmann stated that UPS is investing outside US trade lanes, including a new air hub in Vietnam, which is now operating at 80 percent capacity. She noted double-digit growth in shipments from Asia, although most are bound for Europe and India.
