UPS Q4 2024 Earnings Call: Navigating Headwinds and Building the Future Network 

UPS held its 2024 Q4 earnings call on Jan 30, 2025, providing details about their accomplishments in 2024, the challenges they face in 2025, and some of steps they plan to take to mitigate headwinds in the future.  

In 2024, UPS laid the groundwork for their “network of the future.”  They equipped 60K package cars with Radio Frequency Identification (RFID) technology and were able to increase package visibility and eliminate 12M scans, highlighting the benefits of a sensing network vs. scanning network. The carrier increased sort automation from 60% in 2023 to 63% in 2024 and expanded their European cold chain and healthcare operations.  

UPS will continue to aggressively pursue their transformation into the “network of the future” in 2025. There are 140 active projects slated for this year, of which 61 will be live in 2025. In addition, UPS has already closed five facilities this year. No concrete details were provided on the projects, but the focus appeared to be on improving efficiency.  

As for 2025 challenges, the following were discussed on the earnings call:    

To address these challenges, UPS is focusing on the “network of the future” with a network re-configuration and multi-year initiatives that are expected to yield $1B in savings.  

UPS plans to align capacity with lower volumes by adjusting both fixed and variable costs. They will also close 10% of their buildings, reduce the vehicle and aircraft fleets, and decrease labor and equipment hours and miles.  

There are changes to bring the UPS SurePost volume fully into the UPS network, but about half of the final mile was already on Brown trucks. UPS had available capacity, and through their engineering algorithm, they matched across multiple days or within proximity to other packages to re-direct the packages.  All SurePost packages were being delivered by the UPS fleet, as of Jan 1st.  The sorting of UPS SurePost volume has always been processed in UPS facilities, so no changes were needed to the sort.  The bottom line is that there will be more stops but no additional miles, and they will not need to add assets. Keep in mind that while there may be efficiencies for UPS, it may not translate to improved service for the shipper.  Consolidating packages by day and proximity can just as likely mean pushing the delivery day back as pulling it forward. 

Looking forward, UPS is prioritizing revenue quality, investing in automation, decreasing capital requirements, and looking for volume growth. They see volume growth opportunity in the churn in the wake of the USPS change, organic revenue growth, small and medium businesses, healthcare, and B2B, all of which are targeted to increase package yields. 

While UPS is working to mitigate the effects of lost revenue and is trying to bring more volume into their network without added cost, that does not mean that shippers are going to benefit from the efficiencies. UPS increased the cost of SurePost packages by an average of 9.9% this year, and they announced new Delivery Area Surcharge (DAS) and fuel surcharge increases, which happen multiple times per year as of late.  

It is critical to regularly review market intelligence, analyze contracts and shipping patterns for more optimal solutions, and explore new carriers in the market. Our team helps the world’s best brands navigate these complexities in the ever-changing shipping landscape with confidence. Learn more about why top shippers depend on Green Mountain as their advisors.