For America's biggest delivery companies, the pandemic boom has given way to a cooling demand. Both Federal Express (FedEx) and United Parcel Service (UPS) have taken similar turns, away from low-margin deliveries. In January 2025, UPS said it would halve its business with Amazon, which once brought in 13% of revenue, citing a drag on profit. FedEx has spun off its underperforming FedEx Freight division.
Investors are happier with FedEx's performance, with its market capitalization rising by 38% in the past year, against just 5% for UPS. FedEx has been merging its ground and air networks, expected to save $2bn by the end of next year. UPS has been slashing costs, closing 93 buildings and cutting 48,000 staff, reducing costs by $3.5bn.
However, UPS faces challenges, including a wage deal with the Teamsters union and fierce competition from FedEx in the business-to-business market. Amazon remains a threat to both companies, having declared plans to expand its logistics business.
While UPS promises a turning point in the second half of this year, it has a long road ahead to regain ground on FedEx.
