United Parcel Service (NYSE:UPS) reported third-quarter 2026 revenue of $22.9 billion, up 6.7% from a year earlier, as growth across its U.S. Domestic, International and Supply Chain Solutions segments helped the company exceed its expectations and raise its full-year outlook.
Consolidated operating profit totaled $2.1 billion, while adjusted diluted earnings per share were $1.69. The company said its GAAP results included a $279 million net charge, or $0.32 per diluted share, reflecting transformation strategy costs and a goodwill impairment in Supply Chain Solutions, partly offset by a gain from the sale of MD-11 assets.
CEO Carol Tomé said the company has passed an “inflection point” in several elements of its strategy, citing improved volume trends, operating profit growth and margin expansion. “Better is truly better than bigger,” Tomé said, reiterating UPS’s focus on premium volume, revenue quality and network efficiency.
U.S. Domestic Profit and Margin Improve
UPS’s U.S. Domestic segment generated $14.9 billion in revenue, a 4.5% increase from the prior-year period. Average daily volume in the segment declined 3.3%, reflecting the company’s deliberate reduction of Amazon volume, but revenue per piece increased 6.1%.
About half of the revenue-per-piece gain came from base rates and customer mix improvements, according to CFO Brian Dykes, while higher fuel rates accounted for the remainder. Total U.S. Domestic expenses increased 3.9%, primarily because of fuel and purchased transportation costs.
Operating profit in U.S. Domestic exceeded $1 billion, increasing 14.3% year over year. The segment’s operating margin rose 60 basis points to 7%, as revenue-per-piece growth exceeded cost-per-piece growth by 60 basis points.
Small and medium-sized businesses, including platforms, represented a record 35.1% of total U.S. volume, up roughly 240 basis points from a year earlier. SMB average daily volume rose 3.7%, while combined average daily volume from SMB and enterprise customers increased by more than 200,000 pieces per day.
UPS said its Digital Access Program generated $1.4 billion in global revenue during the quarter. Air services and commercial ground shipments accounted for nearly 30% of Digital Access Program volume, reflecting a shift toward more premium business.
International Returns to Operating-Profit Growth
The International segment recorded $5 billion in revenue, up 7.1% year over year, and operating profit of $746 million, an increase of $55 million. Its operating margin was 14.9%, slightly above the prior-year quarter and above UPS’s expectations.
International average daily volume declined 8.7%, which UPS attributed primarily to geopolitical tensions. However, volume trends improved during the quarter, and U.S. inbound volume returned to year-over-year growth in September. Asia-to-Asia export volume increased 8.4%, marking the third consecutive quarter of growth for that trade lane.
Revenue per piece in International increased 15%, with roughly half of that growth tied to fuel rates. UPS said favorable geographic mix and stronger revenue quality contributed to the segment’s return to year-over-year operating-profit growth for the first time in six quarters.
Tomé also highlighted investments intended to support higher-value global business, including a new air hub at Clark International Airport in the Philippines and a multifunctional facility in Amsterdam that combines freight forwarding, customs brokerage and healthcare cold-chain capabilities.
Supply Chain Growth and Network Changes
Supply Chain Solutions revenue increased by $459 million from the prior year to $3 billion. Forwarding revenue rose 17.5%, supported by higher international air-freight and ocean-freight rates, while logistics revenue climbed 17.2%, driven by healthcare logistics. UPS Digital, which includes Roadie and Happy Returns, delivered revenue growth of nearly 50% from the third quarter of 2025.
The segment produced operating profit of $274 million and an operating margin of 9.2%. UPS noted that third-quarter 2025 Supply Chain Solutions results included a $330 million gain from a sale-leaseback transaction.
The company has introduced a new global operating model under which Matt Guffey leads U.S. Domestic operations, Wilfredo Ramos oversees International Small Package, Global Healthcare, forwarding and logistics, and Nando Cesarone leads global air, automation and surface transportation operations.
Cesarone said the company aims to combine best practices from domestic and international operations to create what he called a “single intelligent transportation utility.” UPS expects RFID technology and automation to support productivity gains, with nearly 70% of packages projected to flow through an automated process during the holiday season.
Outlook Raised as Holiday Season Approaches
UPS raised its full-year 2026 outlook, now expecting approximately $92.6 billion in consolidated revenue, $8.75 billion in consolidated operating profit and diluted earnings per share of about $7.28. The company also raised its free-cash-flow outlook to approximately $6.1 billion, including payments related to the Driver Choice Program.
- Fourth-quarter consolidated revenue is expected to be about $25.7 billion, up roughly 5% year over year.
- Fourth-quarter consolidated operating profit is projected at approximately $3.3 billion.
- U.S. Domestic revenue is expected to rise about 3%, with an operating margin of approximately 10.5%.
- International revenue is projected to increase about 7%, with an operating margin of approximately 20%.
- Supply Chain Solutions revenue is expected to rise nearly 13%, with an operating margin of approximately 12.2%.
UPS expects average daily volume to rise about 25% sequentially from the third quarter to the fourth quarter based on forecasts from its largest peak-season customers. Total fourth-quarter U.S. average daily volume is still expected to be modestly lower than a year earlier because of the Amazon volume reduction.
Dykes said UPS remains on track to achieve its $3 billion cost-savings objective, with $1.8 billion realized through September. He also said the company expects steady margin improvement in future years as premium-volume growth, pricing discipline and network productivity continue to outpace cost growth.
Tomé said the company’s dividend is “safe and secure” and that the expiration of cash requirements associated with the Driver Choice Program should help improve free cash flow in 2027. UPS said the program required $1.4 billion of cash spending in 2026.
About United Parcel Service (NYSE:UPS)
United Parcel Service, Inc (NYSE: UPS) is a global package delivery and logistics company. Its services include the transportation and delivery of packages and freight, time-definite express delivery, supply chain management, customs brokerage, and logistics consulting. UPS serves businesses and consumers through ground, air, and international delivery networks.
The company operates across the United States and in international markets throughout Europe, Asia-Pacific, Latin America, Canada, and other regions.
