United Parcel Service, Inc. (UPS): Business Model Canvas [Dec-2025 Updated]

You're digging into the core engine of United Parcel Service, Inc. (UPS) right now, and honestly, their late 2025 strategy is a fascinating pivot: it's all about 'Better Not Bigger.' After a tough negotiation cycle, like the new Teamsters contract hitting labor costs hard, the focus isn't just growth; it's about surgically cutting out the low-margin package volume to protect profitability. We're talking about a deliberate shift to high-value segments, aiming for a $3.5 billion cost reduction through programs like Efficiency Reimagined and closing 73 facilities by June 2025. To see exactly how this strategic pruning and focus on specialized logistics-like their healthcare expansion-reshapes everything from their Key Resources to their Revenue Streams, you need to look closely at the nine blocks below.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships UPS, Inc. relies on to keep that massive network moving, so let's dive right into the hard numbers for late 2025.

Strategic alliance with U.S. Postal Service (USPS) for air cargo and resuming Ground Saver last-mile delivery.

The relationship with the USPS has seen a major pivot. After UPS pulled the volume in-house at the start of 2025 when the USPS overhauled agreements, the density challenges became clear. For instance, UPS reported that making more Ground Saver delivery stops than expected in the second quarter of 2025 hurt results by about $85 million. Similarly, Ground Saver volume declined 23% year-over-year in Q2 2025, and further dropped -32.7% year-over-year in Q3 2025. So, by late October 2025, UPS announced a preliminary agreement to restore last-mile delivery for UPS Ground Saver, reversing that in-house strategy. This move aims for a "win-win-win" by leveraging the USPS's last-mile network for low-cost shipments. Separately, UPS secured a significant air cargo contract with the USPS, announced in April 2024, making UPS the USPS's primary air cargo provider to move the majority of their air cargo within the US.

Technology partners like ProShip for seamless multi-carrier shipping integration.

These software partners are key for efficiency at the shipper level. ProShip, for example, is a certified platform carrier partner. ProShip's commitment to the ecosystem was recognized when they were named the 2025 UPS Ready Partner of the Year in March 2025. This partnership ensures that high-volume shippers using ProShip can automate carrier service optimization, including rate shopping across UPS services like UPS Premier and UPS Mail Innovations, without disruptive updates thanks to its versionless architecture.

Global network of third-party logistics (3PL) providers for specialized freight and customs brokerage.

Through its Supply Chain Solutions division, United Parcel Service, Inc. partners and competes within the broader 3PL space. The U.S. third-party logistics market was estimated to reach USD $336.64 billion in 2025. United Parcel Service, Inc.'s own market capitalization stood at $113.38 Billion as of October 2024. The partnership aspect involves leveraging this network for services that complement their core package delivery, specifically in areas like freight forwarding, customs brokerage, and contract logistics, especially as global supply chains grow more complex.

Strategic acquisitions like Andlauer Healthcare Group Inc. (closed Jan 2025) for cold chain expansion.

The acquisition of Andlauer Healthcare Group Inc. (AHG) was a major strategic move to bolster UPS Healthcare. The definitive agreement, announced in April 2025, set the total purchase price at approximately CAD $2.2 billion (USD $1.6 billion), with shareholders receiving CAD $55.00 per share in cash. United Parcel Service, Inc. announced the completion of this acquisition on November 3, 2025. This adds specialized cold chain transportation solutions and third-party logistics expertise, supporting the company's overall strategy. For context, United Parcel Service, Inc. reported 2024 revenue of $91.1 billion and employed approximately 490,000 staff.

Suppliers for a massive fleet of over 100,000 vehicles and 500+ aircraft.

The physical assets underpinning the service rely on a vast supplier base for manufacturing and maintenance. United Parcel Service, Inc. operates over 119,000 delivery vehicles globally. The air cargo side is equally massive, managed by UPS Airlines. Here are the key fleet statistics as of late 2025:

The airline is the world's largest operator of the Boeing 747-8F, with 30 aircraft of that type.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Key Activities

You're mapping out the core engine of United Parcel Service, Inc. (UPS) as of late 2025. The key activities are heavily focused on aggressive internal restructuring to drive profitability, alongside maintaining its massive global physical network.

Executing the Efficiency Reimagined program to achieve $3.5 billion in cost reductions.

UPS is actively executing the Efficiency Reimagined initiative, which, combined with Network Reconfiguration, is expected to yield approximately $3.5 billion in total expense reductions for the full year 2025. As of September 30, 2025, the company reported achieving cost savings of roughly $2.2 billion against this target. This cost reduction effort is strategically allocated across different cost categories: 35% from variable costs, 35% from semi-variable costs like operational positions, and 30% from fixed costs. This program is also tied to significant workforce adjustments; for instance, the effort resulted in a workforce reduction of about 34,000 positions as of the end of the third quarter of 2025.

Global package pick-up, sorting, and delivery across domestic and international segments.

The fundamental activity remains the global movement of goods. United Parcel Service, Inc. (UPS) delivers an average of about 22 million packages per day across its worldwide footprint. The U.S. Domestic Segment remains the largest revenue contributor, generating around 65% of total revenue, while the International segment accounts for 20% of total revenue. However, the domestic volume is being actively managed; in the third quarter of 2025, the U.S. average daily volume (ADV) was approximately 16.2 million packages. Conversely, the international segment showed growth, with total ADV increasing by 4.8% in the third quarter of 2025.

Network reconfiguration, including closing 73 facilities by June 2025 to optimize capacity.

A major operational activity is the largest network reconfiguration in the company's history, designed to align capacity with expected volume levels and boost productivity through automation. United Parcel Service, Inc. (UPS) stated its intention to close 73 of its owned and leased properties nationwide by the end of June 2025. Within the first nine months of 2025, this effort led to the closure of operations at 93 buildings. This restructuring is also tied to a planned reduction of approximately 20,000 operational positions during 2025. The company is also accelerating the reduction of volume from its largest customer, with plans to cut that volume by more than 50% by the second half of 2026.

The facility optimization efforts are part of a broader push toward automation:

• Anticipated volume processed through automated systems in Q4 2025: 66%.
• Volume processed through automated systems in Q4 2024: 63%.
• Total workforce reduction expected under Efficiency Reimagined as of September 30, 2025: about 34,000 positions.
• Operational workforce reduction expected during 2025: approximately 20,000 positions.

Developing high-margin specialized logistics, especially in the healthcare and cold chain sectors.

To offset pressures in core package delivery, United Parcel Service, Inc. (UPS) is heavily investing in specialized logistics, where profit margins are notably higher. The Healthcare division has an ambitious goal to double its revenue from $10 billion in 2023 to $20 billion by 2026. Margins for these healthcare services are reported to be in the high teens. The Supply Chain Solutions segment reported revenue of $2.7 billion in the second quarter of 2025, with an operating margin of 8%.

Key metrics for the specialized logistics focus include:

Managing and optimizing the integrated global air and ground transportation network.

The physical network management is central, involving a massive asset base. United Parcel Service, Inc. (UPS) manages a fleet of more than 500 planes and 100,000 vehicles. The optimization activity involves integrating new automation to improve the efficiency of this network. For example, the company anticipates that by the fourth quarter of 2025, 66% of its volume will move through automated processes, an increase from 63% in the fourth quarter of 2024. This integrated network supports global operations, with international revenue rising 6.9% to $4.923 billion in the fourth quarter of 2024, supported by an 8.8% increase in total daily package volume for that quarter. The company is also focusing on revenue quality within this network, as evidenced by U.S. domestic revenue per piece increasing by 5.5% year-over-year in the second quarter of 2025. Finance: draft 13-week cash view by Friday.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Key Resources

You're looking at the core assets that let United Parcel Service, Inc. (UPS) move packages globally, and honestly, the numbers are what really tell the story of this infrastructure.

The integrated global smart logistics network is the foundation, connecting over 220 countries and territories worldwide. This physical backbone is supported by significant financial backing, reflected in its market standing.

The sheer scale of the transportation fleet is a massive barrier to entry. This isn't just about having trucks; it's about owning the air and ground capacity to execute global promises.

The proprietary technology stack is key to efficiency, moving the operation from manual scanning to automated sensing. This is part of the larger, $9 billion Network of the Future (NoF) initiative.

• RFID deployment in package cars is targeting 100,000 total units by the end of 2025 (60,000 in the prior year, plus another 40,000 planned for 2025).
• This technology aims to eliminate approximately 12 million manual scans per day.
• The goal is shifting the network from scanning-based to sensing-based logistics.
• RFID readers are being built into vehicles to automatically detect millions of tagged packages.

The human capital is significant, especially given the unionized nature of the ground operations. The workforce size fluctuates, but the scale remains immense.

As of fiscal year 2025, the total number of employees was reported at 490,000. To be specific, as of December 31, 2024, this included 254,360 full-time and 235,640 part-time employees. That's a lot of people moving freight.

Finally, the brand itself is a resource. Being named the most valuable logistics brand for the 11th year running in 2025, valued at $32.6 billion, speaks directly to the reputation for reliability you mentioned. Plus, Morning Consult ranked UPS No. 3 on its 2025 Most Trusted Brands list, ranking them highest among shipping and logistics brands.

Finance: draft 13-week cash view by Friday.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Value Propositions

You're looking at the core promises United Parcel Service, Inc. (UPS) makes to its customers-the reasons they choose the brown trucks over the competition. These value propositions are deeply tied to their operational scale and recent strategic shifts, especially around higher-margin services.

Reliability and Speed: Industry-leading on-time service for time-definite express shipments.

For time-critical shipments, United Parcel Service, Inc. (UPS) consistently delivers industry-leading performance, even when the overall market faces headwinds. You saw this clearly during the 2024 peak season, where reliability was tested across the board. For instance, during the Cyber 5 period in 2024 (Thanksgiving through Cyber Monday), United Parcel Service, Inc. (UPS) achieved an on-time delivery performance (OTP) of 98.9% for all domestic parcel services combined, according to ShipMatrix data. Even looking at the entire month of December 2024, United Parcel Service, Inc. (UPS) led the national carriers with a combined OTP of 96.5%. This contrasts with its December 2023 performance of 98.7%, showing the pressure on the network, but still maintaining the top spot.

The commitment to speed and reliability is also reflected in their technology investments, such as equipping nearly 60,000 package cars with RFID sensors in 2024, which is 66% of their fleet. This technology helps eliminate 12 million manual scans per day, directly enhancing package visibility for you and your customers.

Global Reach: End-to-end service in over 220 countries and territories.

The sheer scale of United Parcel Service, Inc. (UPS) network is a massive value proposition, offering end-to-end logistics across the globe. As of late 2025, United Parcel Service, Inc. (UPS) operates in over 200 countries and territories. This massive footprint is supported by approximately 490,000 employees worldwide. The International segment remains a key part of the business, reporting $4.5 billion in revenue for the second quarter of 2025. Furthermore, export volume growth in that segment was strong, increasing 6.1% year-over-year in Q2 2025, showing continued global trade activity supported by their network, like the recently expanded air freight capacity between Delhi and Cologne.

Here's a snapshot of the operational scale supporting this global reach:

Specialized Logistics: Complex, high-value solutions for healthcare (e.g., cold chain) and high-tech.

You're seeing a clear strategic pivot toward specialized logistics, which offers stickier customers and higher margins compared to standard package delivery. The healthcare division is the prime example of this focus. United Parcel Service, Inc. (UPS) has an ambitious goal to double its healthcare revenue from $10 billion in 2023 to $20 billion by 2026. In the second quarter of 2025, this segment grew revenue by 5.7% year-over-year, demonstrating progress toward that target. This is supported by a dedicated global infrastructure, including 125 GDP/GMP facilities across 34 countries, covering over 1.5 million square meters of specialized space. The digital arm, UPS Digital (which includes Roadie and Happy Returns), also shows significant traction, with revenue growing 26.4% year-over-year in Q2 2025.

The value here is precision and compliance, which commands a premium; an analyst noted a refrigerated medicine shipment could yield $300 versus delivering a box of socks for a similar cost.

Simplified Shipping: Digital tools and APIs for SMBs to manage complex logistics easily.

For small and medium-sized businesses (SMBs), United Parcel Service, Inc. (UPS) is delivering value through digital integration, making complex shipping manageable. At the end of 2024, SMBs accounted for 28.9% of United Parcel Service, Inc. (UPS)'s total U.S. volume, a slight increase of 0.3% year-over-year. The Digital Access Program (DAP) is a key driver here, generating $3.3 billion in global revenue in 2024, which was a 17% year-over-year increase. This means your integration via APIs or digital platforms is directly contributing to their growth in this segment.

Key digital and network enablers for SMBs include:

• DAP Global Revenue (2024): $3.3 billion
• DAP YoY Revenue Growth (2024): 17%
• SMB U.S. Volume Share (End of 2024): 28.9%
• Package Cars with RFID Sensors (2024): Nearly 60,000
• Manual Scans Eliminated Daily: 12 million

Cost-Effective Ground: Ground Saver service for non-urgent, residential deliveries.

The Ground Saver service, which rebranded from SurePost on April 2, 2025, is positioned as the cost-effective option for non-urgent residential shipping, though it has seen recent strategic adjustments. United Parcel Service, Inc. (UPS) brought the final-mile delivery entirely in-house for this service, ending the USPS handoff. This shift, however, came with cost implications; in the second quarter of 2025, the Ground Saver Average Daily Volume (ADV) declined by 23.3%, and the in-housing effort hurt results by about $85 million due to higher-than-expected delivery stops. Furthermore, new surcharges and rate tables effective June 2, 2025, led to rate increases for some shippers between 8-10%, depending on zone and weight. The declared value protection also changed, dropping from $100 under SurePost to $20 for Ground Saver, which means added cost for higher-value shipments.

The service is now tailored for a narrower profile, focusing on lightweight, short-distance shipments, as evidenced by the volume decline:

United Parcel Service, Inc. (UPS) - Canvas Business Model: Customer Relationships

You're looking at how United Parcel Service, Inc. (UPS) manages the connections with the millions of entities that use its network. It's a multi-tiered approach, moving from deep, personal service for the biggest players to fully automated, hands-off interactions for everyone else.

Dedicated Account Management

For the largest business-to-business (B2B) clients, United Parcel Service, Inc. (UPS) deploys a high-touch model. This involves dedicated account management teams negotiating specific service agreements. This relationship tier is crucial for managing major volume flows and integrating services deeply into a client's supply chain. We see the focus on revenue quality in the segment data; for instance, in fiscal Q3 2025, B2B represented 45.2% of United Parcel Service, Inc. (UPS)'s U.S. volume, a slight increase from 43.7% in Q2 2025, showing the continued importance of these large relationships despite overall volume shifts.

The strategic shift away from volume concentration is clear. United Parcel Service, Inc. (UPS) announced an agreement in principle with its largest customer to reduce the volume handled by more than 50% by the second half of 2026. This is a direct result of managing those high-volume relationships to ensure they are nutritive for both parties.

Digital Self-Service

The backbone of the majority of customer interactions is digital self-service, making the experience frictionless for the customer. This is where the vast majority of the 1.6 million shipping customers United Parcel Service, Inc. (UPS) serves daily interact with the system for tracking, billing, and rate shopping. The push for digital efficiency is evident in the network upgrades. In 2024, United Parcel Service, Inc. (UPS) equipped nearly 60,000 package cars with RFID sensors, covering 66% of its fleet, which eliminated 12 million manual scans per day and enhanced package visibility for customers.

This automation focus is set to continue. For the fourth quarter of 2025, United Parcel Service, Inc. (UPS) anticipates moving 66% of its total volume through automated processes, up from 63% in the fourth quarter of 2024. Furthermore, the specialized digital offerings are growing fast; United Parcel Service, Inc. (UPS) Digital, which includes services like Roadie and Happy Returns, saw revenue grow 26.4% year-over-year in Q2 2025.

Tailored Solutions

United Parcel Service, Inc. (UPS) uses a consultative sales approach to tailor solutions, particularly for small and medium-sized businesses (SMBs) and specialized sectors. This is a key area for growth outside of the largest accounts. The Digital Access Program (DAP) is the primary vehicle here. Through the first nine months of 2025, United Parcel Service, Inc. (UPS) increased its global DAP revenue by 20%, reaching $2.8 billion, showing that the focus on SMBs through this digital channel is paying off. The company reports having more than 8 million SMBs in this program.

Specialized sectors also receive tailored attention. For example, in the Supply Chain Solutions segment, healthcare logistics revenue specifically increased by 5.7% in Q2 2025, demonstrating success in providing specialized, end-to-end services for that sector.

• SMBs comprised 28.9% of total U.S. volume at the end of 2024.
• The company serves 10.1 million delivery customers across more than 200 countries and territories.
• United Parcel Service, Inc. (UPS) completed the acquisition of Frigo-Trans, a European healthcare logistics company specializing in cold chain, in January 2025.

Transactional

For the infrequent shipper or the customer needing immediate, physical access, The UPS Store network provides the transactional touchpoint. This is the traditional, over-the-counter service. While the company is focused on digital and large-contract growth, The UPS Store remains a vital, accessible channel. The scale of this network is substantial, supporting the transactional needs of the customer base.

Here's a quick look at some key operational and customer metrics as of the latest reported periods:

The focus on insourcing is also a relationship play, ensuring quality control. United Parcel Service, Inc. (UPS) announced it has insourced 100% of its UPS SurePost product as of January 1, 2025, taking that final-mile relationship control back from USPS.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Channels

You're looking at how United Parcel Service, Inc. (UPS) gets its services into the hands of its customers-it's a massive, multi-pronged physical and digital operation. The scale here is what sets them apart from smaller players.

Physical Network: Customer Centers, The UPS Store locations, and authorized service points

The physical footprint is extensive, blending company-owned hubs with franchised retail access points. This network is designed to provide density and convenience across the United States.

As of late 2025, United Parcel Service, Inc. (UPS) operates a vast network of access points:

• Total UPS locations across the United States: 27,901 as of November 06, 2025.
• The UPS Store retail locations in the United States: 5,726 as of December 01, 2025.
• The UPS Store locations across the U.S. and Canada total more than 5,800 as of July 2025.
• Customer accessibility is high, with 90% of the U.S. population living within 5 miles of a UPS Store or UPS Access Point.

The company is actively reconfiguring its network, which, as of January 2025 guidance, could result in the closure of up to 10% of its buildings between 2025 and 2027. However, the pickup and delivery footprint remains largely intact.

Digital Platform: UPS.com and proprietary Application Programming Interfaces (APIs) for enterprise integration

The digital channels are crucial for quoting, tracking, and high-volume business integration. The Digital Access Program (DAP) shows a direct financial contribution from these tools.

For enterprise customers, proprietary APIs allow for deep integration into their systems, which is a key part of securing large contracts. The financial results from digital engagement are clear:

• Digital Access Program (DAP) generated $3.3 billion in global revenue in 2024.
• This DAP revenue represented a 17% year-over-year increase.

The main customer-facing website, ups.com, serves a large audience, with visitors aged 25-34 being the largest demographic group accessing the site as of October 2025.

Direct Sales Force: Dedicated account executives managing large B2B and enterprise contracts

Dedicated account executives focus on securing and managing the high-value, complex logistics needs of large businesses. This channel is critical for steering the business mix toward more profitable segments, aligning with the company's stated strategy.

The focus on higher-margin sectors, like healthcare logistics, is managed through these direct relationships. For instance, the company is targeting $20 billion in healthcare logistics revenue by 2026. United Parcel Service, Inc. (UPS) also saw its U.S. small and medium-size business (SMB) penetration reach 28.9% of total U.S. volume in 2024.

Last-Mile Delivery: UPS drivers and, for certain services, the USPS network

The last mile is where the most cost and complexity reside; it accounts for 53% of total delivery costs in logistics. United Parcel Service, Inc. (UPS) is heavily optimizing this leg through technology and network changes.

The company's proprietary route optimization system, ORION, is a key tool here, reportedly saving 100 million delivery miles annually. Furthermore, United Parcel Service, Inc. (UPS) has transitioned away from the USPS for its economy service, replacing SurePost with the new 'Ground Saver' service, which is now absorbed into its own network. The global last-mile delivery market itself is estimated to be valued at $197.0 billion in 2025.

Here's how the last mile fits into the broader financial picture for 2025:

United Parcel Service, Inc. (UPS) - Canvas Business Model: Customer Segments

You're looking at the customer base for United Parcel Service, Inc. (UPS) as the company executes its major transformation strategy. The focus has clearly shifted toward higher-yielding business, even as overall volume faces pressure from macro factors and strategic customer mix adjustments.

Small and Medium-Sized Businesses (SMBs)

This group is a key growth focus because it drives higher-margin volume. At the end of 2024, SMBs accounted for 28.9% of total U.S. volume, which was an increase of 0.3% year-over-year. The Delivery Area Surcharges (DAP) program specifically delivered $3.3 billion in global DAP revenue in 2024.

Large Enterprise B2B

Manufacturers, distributors, and high-tech companies needing complex supply chain solutions remain central. In the second quarter of 2025, Business-to-Business (B2B) volume represented 43.7% of U.S. volume, marking a 2.2% increase compared to the second quarter of the prior year. For the second quarter of 2025, the U.S. Domestic segment posted a non-GAAP adjusted operating profit of $982 million with an adjusted operating margin of 7.0%. The U.S. Domestic segment reported revenue of $14.5 billion in Q2 2025, with an operating profit increase of 19.4% year-over-year.

Healthcare/Pharmaceutical Companies

This vertical requires specialized, temperature-controlled, and time-critical logistics, offering significantly better profit margins than standard packages. United Parcel Service, Inc. (UPS) has a stated goal to double its healthcare revenue from $10 billion in 2023 to $20 billion by 2026. The operating margin for the healthcare business is in the high teens, a strong contrast to the overall business margin of 10% in 2023. The company operated over 18 million sq. ft. of dedicated healthcare distribution space globally as of year-end 2024. In the Supply Chain Solutions segment during Q2 2025, healthcare logistics revenue specifically increased by 5.7%.

E-commerce Retailers

The strategy here involves a deliberate reduction of low-margin volume, particularly from the largest customer. United Parcel Service, Inc. (UPS) is accelerating the volume reduction with its largest customer, which is expected to decline by about 25% for the full year 2025. The B2C (Business-to-Consumer) average daily volume decreased by 10.9% in Q2 2025. The economy product, Ground Saver, saw its average daily volume decline by 23.3% year-over-year in Q2 2025 due to pricing actions. Conversely, United Parcel Service, Inc. (UPS) Digital, which includes services like Roadie and Happy Returns, grew revenue by 26.4% year-over-year in Q2 2025.

Individual Consumers

Consumers utilize retail channels for personal and return shipments, though this is often the lower-yield end of the spectrum. The overall U.S. average daily volume declined 7.3% in Q2 2025. The average cost per package across the industry was $9.08 in 2024, down 0.44% year-over-year.

Here is a quick look at the segment focus and key metrics as of the latest available data:

The overall company context for the second quarter of 2025 showed consolidated revenue of $21.2 billion. Management confirmed the company is on track to deliver approximately $3.5 billion in expected cost savings for 2025.

• U.S. Revenue (Q3 2025): $14.2 billion, representing 66.2% of total revenue.
• International Revenue (Q3 2025): $4.67 billion, representing 21.8% of total revenue.
• Supply Chain Solutions Revenue (Q3 2025): $2.52 billion, representing 11.7% of total revenue.

The expected full-year 2025 consolidated revenue projection is approximately $89.0 billion, with an expected consolidated operating margin of approximately 10.8%.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Cost Structure

The Cost Structure for United Parcel Service, Inc. (UPS) in late 2025 is heavily influenced by labor agreements, ongoing network modernization, and variable operating expenses like fuel.

Labor Costs

Labor remains a dominant cost component, particularly following the new Teamsters contract ratified in August 2023. This agreement was front-loaded, meaning higher costs were absorbed in 2024, setting the stage for expected profitability improvements as the year-over-year cost impact lessens after August 1, 2024. In 2023, approximately 330,000 U.S. employees represented by the Teamsters included over 50% part-time workers, who saw their starting pay increase to $21 per hour under the new terms. The contract also committed UPS to creating at least 22,500 permanent full-time jobs from part-time roles and an additional 7,500 full-time jobs over the contract's final three years.

Network Reconfiguration Costs and Workforce Reductions

A major cost driver in 2025 is the execution of the Network Reconfiguration and Efficiency Reimagined initiative, aimed at realizing $3.5 billion in annual cost savings for the year. This strategic shift involves significant one-time expenses and workforce adjustments.

The company is consolidating its operational footprint, using lessons from previous closures as a blueprint for this large-scale effort.

Capital Expenditures

United Parcel Service, Inc. (UPS) has a planned capital expenditure budget for 2025.

• Planned Capital Expenditures (CapEx) for 2025: Approximately $3.5 billion.

Fuel and Maintenance

Variable costs associated with operating the massive air and ground fleet are managed partly through surcharges. United Parcel Service, Inc. (UPS) manages a fleet of over 500 planes and 100,000 vehicles. Fuel surcharges fluctuate weekly based on EIA data. For instance, as of December 2, 2025, the basis cost of ground fuel had increased 8.62% year-to-date, leading to a 24.3% overall increase in the Domestic Ground fuel surcharge. Similarly, air fuel basis cost increased 2.95% year-to-date, causing a 23.5% overall increase in the Domestic Air fuel surcharge.

Here's a look at a specific fuel surcharge change in 2025:

• March 10, 2025 Fuel Surcharge Increase: U.S. Ground Domestic and UPS SurePost surcharge rose from 17.25% to 17.75% at a diesel price of $3.20 per gallon.

Technology Investment

Ongoing spending focuses on digital transformation to enhance productivity and efficiency, which supports the network reconfiguration goals. This includes significant investment in automation and data infrastructure.

• Investment in AI-enabled sorting hubs completed by Q3 2025: $1.5 billion.
• AI-enabled routes reduced delivery times year-over-year by 18% in pilot regions.
• Package sorting accuracy at new hubs reached 99.6%.

This spending is intended to help optimize capacity and align with expected volume levels.

United Parcel Service, Inc. (UPS) - Canvas Business Model: Revenue Streams

You're looking at the hard numbers that make up United Parcel Service, Inc. (UPS)'s top line as we head into late 2025. This is where the money actually comes from, broken down by segment.

U.S. Domestic Package segment is the bedrock, bringing in the lion's share of revenue from its ground and air services.

• FY2025 Projected Revenue: $59 Billion
• FY2025 Projected Percentage of Total Revenue: 67%
• Q1 2025 Revenue: $14.5 billion
• Q2 2025 Revenue: $14.1 billion
• Q3 2025 Revenue: $14.2 billion

International Package revenue comes from express and deferred services across air and ground networks globally.

• FY2025 Projected Revenue: $18 Billion
• FY2025 Projected Percentage of Total Revenue: 21%
• Q3 2025 Revenue: $4.67 billion

Supply Chain Solutions revenue covers freight forwarding, contract logistics, and customs brokerage, though this segment saw some softness.

• FY2025 Projected Revenue: $11 Billion
• FY2025 Projected Percentage of Total Revenue: 12%
• Q3 2025 Revenue: $2.52 billion

The revenue mix for the full fiscal year 2025 is projected like this:

Surcharges and Fees are a significant component, driven by annual pricing adjustments and specific service fees. The average General Rate Increase (GRI) for 2025 was 5.9%, effective December 23, 2024. Note that the 2026 GRI of 5.9% was announced, taking effect on December 22, 2025.

• Additional Handling Charges (AHC) and Large Package Surcharges (LPS) increased by up to 27%.
• Residential surcharges commonly exceed $6.00 per package.
• Address correction fees increased to $20.50 in 2025.
• Zone-based surcharges for services like UPS 2nd Day Air saw increases up to 9.2%.

The overall expectation for the year is clear.

2025 Consolidated Revenue: Projected to be approximately $89.0 billion.