United Parcel Service (UPS) revenue in its fiscal Q2 2026 grew year over year by more than $1 billion, with CEO Carol Tome crediting the carrier’s network reconfiguration initiatives.
On the earnings call for its fiscal Q2 2026, which ended June 30, Tome said UPS “executed a deliberate structural reset” for its U.S. business over the past 18 months.
“I’m pleased to say we executed that plan exactly as designed,” Tome told analysts on the call.
Part of that design included reducing 2 million pieces per day of what Tome called “lower-quality Amazon volume.” She said in addition to reconfiguring, UPS further automated its U.S. network for “higher-return opportunities.” That has helped UPS to remove about $4.5 billion in related expenses, she added.
“But this reconfiguration was never the destination,” Tome assessed. “It was the foundation. We now have a leaner, more automated, more agile network that will deliver operating leverage as volume grows. And importantly, incremental volume today carries materially better economics than before because of the structural changes we’ve made.”
Tome also noted that fuel price volatility tied to the U.S. and Israel’s war with Iran “drove higher fuel revenue and corresponding fuel costs.” She said UPS’ fuel surcharges functioned as the carrier designed them, covering the increase in expenses.
UPS revenue in Q2 2026
In its fiscal Q2 2026, UPS consolidated revenue reached $22.8 billion, a 7.6% increase from $21.2 billion the year before.
Of that, $14.93 billion came from UPS’ U.S. domestic segment in Q2 206. That was an increase from $14.08 billion through that same segment the prior year.
UPS’ international segment generated $5.04 billion in Q2 2026, up from about $4.49 billion a year earlier. Supply chain solutions accounted for $2.86 billion in UPS’ Q2 revenue. That increased from $2.65 billion the year before.
UPS’ operating margin was 9.2%, an increase from 8.8% the prior year. That’s also an increase from about 6% in Q1.
Meanwhile, UPS’ digital access program (DAP) generated $1.4 billion in global revenue during Q2. That marked the third straight quarter in which DAP revenue reached $1 billion.
Also in Q2, UPS generated $3 billion in health care revenue. Tome said demand for cold chain logistics is accelerating. To strengthen those capabilities, she said, UPS has added 27 temperature-controlled cross-dock facilities to its network.
“These facilities are designed specifically for fast, precise transfers of complex health care products between air and ground services while maintaining strict temperature control,” Tome said.
UPS package volume in Q2
In Q2, UPS’ total average daily package volume in the U.S. decreased 3.3% year over year.
Meanwhile, total air average daily package volume decreased 2.3% year over year. Excluding Amazon, that air volume increased 1.2% year over year. Brian Dykes, chief financial officer, attributed that to small- and medium-sized businesses (SMBs) and health care customers.
UPS Ground’s average daily package volume in Q2 decreased 3.5% year over year. Dykes attributed the majority of that decline to the reduction in volume from Amazon.
“Notably, when adjusting for Amazon and actions taken on other lower-yielding volume, average daily volume grew year-over-year in the second quarter, underscoring the improvements we’re making through the execution of our strategy,” Dykes said.
UPS’ average daily package volume from SMB customers increased 4.3% year over year.
AI and technological improvements at UPS
Tome said UPS has invested in radio-frequency identification (RFID) and artificial intelligence (AI) as part of its transformation.
She compared RFID to the “eyes and ears within our network.” The AI, she said, is the brain. It transforms the data from RFID into decisions, predictions and actions, she added.
“In fact, we believe RFID is the most significant package visibility advancement in a decade,” Tome said. “We’re using it to move from a scanning-based network to a sensing network, eliminating hundreds of millions of manual scans every year. We’ve completed deployment of RFID sensing technology across all of our U.S. delivery facilities and package cars. And now we’re moving internationally.”
RFID and AI capabilities are generating real-time data about the packages in UPS’ network, Tome said.
“Now pair that data with the AI-powered digital twin of our network, including all modes, facilities, vehicles, aircraft and package flow data,” she said. “This strengthens our ability to dynamically adapt to changing conditions like weather delays or volume forecast.”
She said UPS’ AI constantly tracks network performance. That helps it to optimize planning, routing and execution in near-real time, according to Tome. The result, she said, is a more efficient, reliable and integrated network with full visibility.
UPS’ focus on B2B customers
Tome said UPS is “fully focused on capturing premium volume, like from SMB, health care and B2B customers with a clear emphasis on revenue quality and margin expansion.”
She said demand from U.S.-based SMBs in Q2 grew across sectors. That helped SMB average daily volume growth to increase 4.3% during the quarter.
Tome also noted that B2B ecommerce shippers value the DAP. B2B DAP average daily volume increased 34% year over year for UPS in Q2.
“Looking at B2B, while average daily volume was down 3.2% year-over-year, the rate of decline was 190 basis points better compared to the first quarter, with bright spots in the high tech and automotive sectors,” Dykes said.
He noted that in Q2, B2B represented 43.8% of UPS’ total U.S. volume.
Check back for more earnings reports. Here’s last quarter’s update on UPS sales and revenue.
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