UNITED PARCEL SERVICE INC
For the period ended Sep 30, 2025. Filed Nov 5, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 5, 2025
UPS$108.30-2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001090727-25-000064
OverviewSupplemental Information - Items Affecting ComparabilityResults of Operations - Segment ReviewInternational Package OperationsSupply Chain Solutions OperationsConsolidated Operating ExpensesOther Income (Expense)Income Tax ExpenseLiquidity and Capital ResourcesCash Flows From Operating ActivitiesCash Flows From Investing ActivitiesCash Flows From Financing ActivitiesSources of CreditContractual CommitmentsLegal Proceedings and ContingenciesCollective Bargaining AgreementsRecent Accounting PronouncementsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-05.
0001628280-25-049661
OverviewSupplemental Information - Items Affecting ComparabilityResults of Operations - Segment ReviewInternational Package OperationsSupply Chain Solutions OperationsConsolidated Operating ExpensesOther Income (Expense)Income Tax ExpenseLiquidity and Capital ResourcesCash Flows From Operating ActivitiesCash Flows From Investing ActivitiesCash Flows From Financing ActivitiesSources of CreditContractual CommitmentsLegal Proceedings and ContingenciesCollective Bargaining AgreementsRecent Accounting PronouncementsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 222 previous paragraphs and 213 current paragraphs.
87 unchanged; 92 reworded; 31 added; 39 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (31)
Current report
During the nine months ended September 30, 2025, we returned cash to shareholders by completing our previously announced $1.0 billion of share repurchase program and paying dividends of $4.0 billion.
Current report
◦transformation strategy costs of $250 million, or $0.29 per diluted share, in the third quarter ($351 million, or $0.41 per diluted share, year to date);
Current report
We have excluded the impact of an expense to settle a previously disclosed regulatory matter. We do not believe this is a component of our ongoing operations and we do not expect this or similar expenses to recur.
Current report
We conducted our most recent annual goodwill impairment testing as of July 1, 2025 using both qualitative and quantitative methods. Our quantitative tests utilize a combination of the income and market approaches. We concluded that the fair values of our reporting units were in excess of their respective carrying values.
Current report
Approximately $877 and $726 million of our $4.8 billion consolidated goodwill balance is represented by our Global Freight Forwarding ("GFF") and HLD reporting units, respectively, which, based on our annual impairment evaluation, are exhibiting a limited excess of fair value above carrying value and reflect a greater risk of an impairment occurring in future periods. Both GFF and HLD are showing limited excess of fair value over their carrying values, primarily driven by current market conditions, volatility in global markets, early stages of our healthcare growth strategy and ongoing integration of recent acquisitions. Both GFF and HLD reporting units are included in Supply Chain Solutions.
Current report
Fuel surcharge revenue increased $141 million for the quarter (up $166 million year to date), as pricing initiatives more than offset the impact of lower volume.
Current report
Operating expenses and non-GAAP adjusted operating expenses decreased for both the quarter and year-to-date periods primarily due to a decline of $398 million for the quarter (down $998 million year to date) in facility and transportation-related costs driven by the insourcing of our Ground Saver product.
Current report
•Compensation and benefits expense attributable to our Air and Ground products increased $141 million for the quarter (up $589 million year to date). The increases were primarily driven by increased hours resulting from additional stops as a result of the insourcing of our Ground Saver product. Increased seniority and contractual wage rate increases within our U.S. union workforce and workers' compensation expense also drove an increase to compensation and benefits expense. These increases were partially offset by reduced headcount resulting from the strategic execution of our Network Reconfigurationand Efficiency Reimagined initiatives.
Current report
• Other expenses increased $56 million for the quarter (down $216 million year to date). For the year-to-date period, other expenses decreased driven by gains on real estate and aircraft engine sales and a reduction in costs resulting from the strategic execution of our Network Reconfigurationand Efficiency Reimagined initiatives.
Current report
Export average daily volume increased 5.9% for the quarter and 7.1% year to date due to our agility to adjust to changing trade lanes, and led by strength in SMBs between European countries. The Asia trade lanes continued to be negatively impacted by U.S. trade policy changes that took effect in the second quarter of 2025, which resulted in declines on our China-to-U.S. trade lane in both the quarter and year-to-date periods.
Current report
Domestic revenue per piece increased 6.2% for the quarter (up 3.7% year to date) primarily driven by revenue quality efforts in EMEA.
Current report
Total operating expenses and non-GAAP adjusted operating expenses within Supply Chain Solutions decreased for both the quarter and year-to-date periods driven primarily by the divestiture of Coyote of $468 million (down $1.6 billion year to date), sale-leaseback transactions involving real estate properties within Supply Chain Solutions of $330 million and volume declines and lower purchased transportation costs in our Mail Innovations business.
Current report
Non-GAAP adjusted operating expenses exclude the impact of transformation strategy costs, which were $11 and $84 million in the third quarters of 2025 and 2024, respectively, and $22 and $98 million in the 2025 and 2024 year-to-date periods, respectively. The 2025 year-to-date period also excludes a $20 million gain on divestiture and a $39 million impairment charge. The 2024 quarter and year-to-date periods exclude a $156 million gain related to the divestiture of Coyote. The 2024 year-to-date period also excludes a $41 million write-down related to certain trade names and a $45 million expense related to a regulatory matter.
Current report
•Direct labor costs increased $2 million for the quarter (up $464 million year to date) due to:
Current report
◦Wage rate growth increased $146 million for the quarter (up $406 million year to date) driven by increased seniority, contractual wage rate increases and overtime.
Current report
◦Higher international labor costs due to merit increases and weekend operations within Europe as well as an increase in flight operations payroll of $52 million for the quarter (up $169 million year to date).
Current report
◦Volume declines partially offset the increase in additional stops resulting from insourcing our Ground Saver decreasing labor costs by $179 million for the quarter (down $79 million year to date).
Current report
•Management compensation costs decreased $29 million for the quarter (down $220 million year to date), primarily due to lower overall headcount resulting from our transformation programs, partially offset by an increase in incentive compensation. Year to date, incentive compensation expense decreased. For additional information on our transformation strategy, see note 17 to the unaudited, consolidated financial statements.
Current report
•Separation costs increased $174 million for the quarter (up $215 million year to date) as we execute our transformation strategy.
Current report
•Workers' compensation expense increased $64 million for the quarter (up $74 million year to date) due to prior year claim developments and higher average claim cost, partially offset by a reduction in hours worked.
Current report
Other expenses decreased $45 million for the quarter (up $100 million year to date) and, on a non-GAAP adjusted basis, decreased $201 million for the quarter (up $70 million year to date). The principal factors contributing to the overall changes were driven by higher gains of $164 million for the quarter (net gain of $244 million year to date) primarily from the $350 million gains from the third quarter of 2025 sale-leaseback transactions and sales of surplus real estate compared to the 2024 period gain of $156 million from the divestiture of Coyote. Other expenses increased $112 million for the quarter (up $301 million year to date) driven by increased third-party consulting and legal costs, commissions, customer credit losses and airline operation expenses.
Current report
Non-GAAP adjusted operating expenses exclude the following:
Current report
•In the 2025 year-to-date period we recognized a gain of $20 million from the divestiture of a business within UPS Digital. In the third quarter and year-to-date period of 2024 we recognized a gain of $156 million from the divestiture of Coyote.
Current report
•In the 2024 year-to-date period, we incurred a total of $133 million in expenses related to regulatory matters.
Current report
Investment income and other decreased by $61 million in the third quarter, primarily due to lower rates on lower average invested balances and a decline in pension income.
Current report
In July 2025, the One Big Beautiful Bill Act ("OBBBA") was signed into law. The income tax-related provisions of the OBBBA include revisions to international tax regimes, the repeal of mandatory capitalization of research and development expenditures, and the extension of bonus depreciation. The OBBBA has multiple effective dates, with certain provisions effective in future years. The estimated impact of the OBBBA is not material to our overall effective tax rate for the current year and has been reflected in our unaudited, consolidated financial statements during the three and nine months ended September 30, 2025. We are continuing to evaluate the expected impact in future years and expect a favorable impact to our effective tax rate and cash flows.
Current report
These factors were partially offset by an increase in cash proceeds of $246 million from factoring certain accounts receivable during the three months ended September 30, 2025. For additional information on our factoring program, see note 3 to the unaudited, consolidated financial statements.
Current report
Proceeds from the disposal of businesses, property, plant and equipment decreased compared to the prior period. During the nine months ended September 30, 2025, proceeds primarily related to sale-leaseback transactions totaling $465 million involving real estate properties within our Supply Chain Solutions businesses and a data center. During the nine months ended September 30, 2024, proceeds of $1.0 billion primarily related to the divestiture of Coyote.
Current report
(2)Subsequent to September 30, 2025, we entered into six new aircraft leases which we expect to be treated as finance leases. We expect the existing aircraft purchase commitments included above will decrease and be reflected as leases.
Removed paragraphs (39)
Previous report
During the second quarter and first half of 2025, we continued to return cash to shareholders. We completed our previously announced $1.0 billion of share repurchases in the first half of 2025 and paid dividends of $1.64 per share and $3.28 per share in the second quarter and year-to-date periods of 2025, respectively.
Previous report
◦transformation strategy costs of $57 million, or $0.08 per diluted share, in the second quarter ($101 million, or $0.12 per diluted share, year to date);
Previous report
In connection with the Network Reconfigurationand Efficiency Reimagined programs, we expect to exclude between $400 and $650 million in non-GAAP adjusted expense during 2025, related primarily to third-party consulting fees, employee separation benefits and certain programmatic expenses. We expect the costs associated with these actions may increase should we determine to close additional buildings. In addition, we believe that workforce reductions may require a remeasurement of certain U.S. pension and postretirement benefit plan obligations and assets during 2025. We are not yet able to estimate the timing of potential impact of such an event. As of June 30, 2025, we have incurred costs related to these programs of $126 million. We have begun to realize the expected benefits from these programs and, as previously disclosed, expect to achieve $3.5 billion in savings from these programs in 2025.
Previous report
We exclude the impact of a charge to settle a regulatory matter that we consider to be unrelated to our ongoing operations and that we do not expect to recur. For more information regarding this matter, see note 10 in our Annual Report on Form 10-K for the year ended December 31, 2024.
Previous report
Operating expenses and non-GAAP adjusted operating expenses were flat for both the quarter and year-to-date periods as a result of the decline in volume, and the following:
Previous report
•Ground and rail transportation decreased $406 million for the quarter (down $537 million year to date) driven by the insourcing of our Ground Saver product.
Previous report
•Compensation and Benefits for our Air and Ground products increased $222 million for the quarter (up $341 million year to date) primarily driven by increased stops associated with the insourcing of our Ground Saver product and the impact of health and welfare and wage rate increases for our union workforce. This was partially offset by a decrease in management compensation cost due to a reduction in incentive compensation expense.
Previous report
As a result of the factors described above, operating profit decreased $72 million for the quarter (up $74 million year to date), with operating margin decreasing 50 basis points to 6.5% for the quarter (up 20 basis points to 6.6% year to date). Non-GAAP adjusted operating profit decreased $14 million for the quarter (up $150 million year to date), with non-GAAP adjusted operating margin remaining unchanged at 7.0% for the quarter (up 50 basis points to 7.0% year to date). Non-GAAP adjusted operating profit excludes the impact of operating expense adjustments discussed above.
Previous report
Export average daily volume increased 6.1% for the quarter and 7.7% year to date due to SMB and enterprise customers in Europe, the Indian sub-continent, Middle East and Africa ("EMEAI") and retail customers in the Americas trade lanes. The Asia trade lanes were impacted by U.S. trade policy changes during the quarter, which resulted in adecline on our China-to-US trade lane. This decline was partially offset by growth on our China to the rest of the world trade lanes, and from the rest of world into the U.S.
Previous report
Export premium products increased 7.0% for the quarter (up 8.7% year to date) driven by increases in Worldwide and Transborder Express products. Transborder Express product volume increased driven by European customers in the healthcare industry. Worldwide Express product volume increased as a result of accelerated U.S. inbound services in anticipation of tariff changes. Export non-premium product volumes increased 5.2% for the quarter (up 8.4% year to date), primarily driven by increases in Transborder Standard products from SMBs primarily within the retail sector.
Previous report
Domestic revenue per piece increased 6.3% for the quarter (up 2.5% year to date) primarily driven by changes in EMEAI customer mix.
Previous report
As a result of the factors described above, operating profit decreased $46 million for the quarter ($61 million year to date), with operating margin decreasing 140 basis points to 15.0% (down 110 basis points to 14.8% year to date). Non-GAAP adjusted operating profit decreased $142 million for the quarter ($170 million year to date) and non-GAAP adjusted operating margin decreased 370 basis points to 15.2% (down 240 basis points to 15.1% year to date).
Previous report
Total operating expenses and non-GAAP adjusted operating expenses within Supply Chain Solutions decreased for the quarter and year-to-date periods for the reasons described below. Non-GAAP adjusted operating expenses within our Forwarding, Logistics and other Supply Chain Solutions businesses exclude expenses related to financial systems and other projects undertaken as part of our transformation strategy as shown in the table above.
Previous report
Forwarding operating expenses, and non-GAAP adjusted operating expenses, decreased $565 and $574 million, respectively, during the quarter (both decreasing $1.1 billion year to date), driven primarily by the impact of the third quarter 2024 divestiture of Coyote. Operating expenses, including non-GAAP adjusted operating expenses, in our other forwarding businesses decreased $43 million for the quarter (down $30 million year to date), primarily due to a decrease in market rates for third-party air and ocean transportation.
Previous report
Logistics operating expenses and non-GAAP adjusted operating expenses decreased $28 and $16 million, respectively, for the quarter (up $107 and $159 million year to date, respectively) primarily driven by volume declines and lower purchased transportation costs in our Mail Innovations business. This was partially offset by increases across our other Logistics businesses. Year to date, expenses associated with our Mail Innovations business increased primarily driven by higher purchased transportation rates during the first quarter, resulting from the expiration of a contract with our primary vendor. These cost increases began to dissipate in the second quarter of 2025 as we started utilizing alternative vendors. We also took action to address the revenue quality in this business, and experienced improvements therein. Non-GAAP adjusted operating expenses within Logistics in the second quarter of 2024 excluded a $41 million write-down related to certain trade names.
Previous report
Operating expenses and non-GAAP adjusted operating expenses in our other Supply Chain Solutions businesses increased $3 and $28 million, respectively, for the quarter (up $23 and $49 million, year to date, respectively). Within our digital businesses, operating expenses increased $39 million during the quarter and $52 million, year to date, primarily due to volume growth at Roadie. During the second quarter, non-GAAP adjusted operating expenses in our other Supply Chain Solutions businesses exclude a $20 million gain on divestiture and year to date non-GAAP adjusted operating expenses exclude a $39 million impairment charge, both related to a business within UPS Digital. Non-GAAP adjusted operating expenses in these businesses in the prior year periods exclude a $5 and $45 million expense related to a regulatory matter in the 2024 second quarter and year-to-date periods, respectively.
Previous report
As a result of the factors described above, total operating profit decreased $4 million for the second quarter (down
Previous report
$82 million year to date), with operating margin increasing 150 basis points to 8.8% (down 40 basis points to 5.2% year to date). On a non-GAAP adjusted basis, operating profit decreased $32 million for the second quarter (down $152 million year to date) with non-GAAP adjusted operating margin increasing 50 basis points to 8.0% (down 140 basis points to 5.8% year to date). Non-GAAP adjusted operating profit excludes the impact of operating expense adjustments discussed above.
Previous report
Total compensation expense and non-GAAP adjusted total compensation expense increased for both the quarter and year-to-date periods. Compensation costs increased $50 million for the quarter (up $285 million year to date) and, on a non-GAAP adjusted basis, increased $56 million for the quarter (up $292 million year to date). The principal factors contributing to the overall increases were:
Previous report
•Direct labor costs increased $188 million for the quarter (up $462 million year to date). Additional stops resulting from insourcing our Ground Saver product increased direct labor costs by $229 million for the quarter ($527 million increase year to date). Wage rate growth was responsible for $128 million of the cost increase ($260 million increase year to date) driven by increased seniority within our union workforce, contractual wage rate increases for our U.S. union workforce and higher overtime. International labor cost increased $29 million for the quarter (up $42 million year to date) due to merit compensation increases and the implementation of weekend operations within Europe. Other payroll costs for flight operations increased $35 million for the quarter due to increased activity (up $75 million year to date). These increases were partially offset by the impact of decreases in volume, which reduced direct labor expense by $228 million for the quarter (down $427 million year to date). Further expected growth in compensation expense is expected to be partially offset by the anticipated impact from workforce reductions as we execute on our Network Reconfiguration and Efficiency Reimagined initiatives.
Previous report
•Indirect labor costs increased $23 million for the quarter (up $13 million year to date) due to higher administrative and overtime costs.
Previous report
•Management compensation costs decreased $162 million for the quarter (down $191 million year to date) due to lower overall headcount and a reduction in incentive compensation expense.
Previous report
•Other employee benefits expense increased $47 million for the quarter (up $41 million year to date) due to higher separation costs as we continue to right-size our business.
Previous report
•Accruals for paid time off, payroll taxes and other costs increased $22 million for the quarter (up $45 million year to date) primarily due to the impact of insourcing our Ground Saver product and higher wages.
Previous report
•Workers' compensation expense increased $12 million for the quarter (up $10 million year to date) due to less favorable developments in prior year claims partially offset by the impact from a reduction in overall hours worked.
Previous report
•Rail transportation decreased $30 million for the quarter (down $49 million year to date) primarily due to lower volume.
Previous report
•Auto liability insurance costs increased $43 million for the quarter (up $85 million year to date) driven by the unfavorable development of old claims.
Previous report
•Technology expense increased $28 million for the quarter (up $42 million year to date) due to higher software costs and rental costs for tech equipment.
Previous report
•Third-party consulting expense increased $27 million for the quarter (up $78 million year to date) primarily driven by cost associated with our transformation initiatives.
Previous report
•Commissions paid increased $14 million for the quarter (up $62 million year to date) primarily due to growth in our Digital Access Program.
Previous report
These increases were offset by $28 million in gains from asset disposals for the quarter ($118 million year to date) compared to immaterial impacts in the 2024 periods.
Previous report
•In the second quarter and year-to-date 2024 periods, we incurred $88 million of international regulatory expense. We did not have any similar expenses in 2025.
Previous report
•In the second quarter and year-to-date 2024 periods, we incurred expenses of $5 and $45 million, respectively, related to a regulatory matter. We did not have any similar expenses in 2025.
Previous report
•Higher contributions to our company-sponsored, defined benefit pension and postretirement medical plans.
Previous report
•Unfavorable changes in working capital driven by:
Previous report
Proceeds from the disposal of businesses, property, plant and equipment were higher primarily due to the impact of a real estate sale-lease back transaction and increased sale of facilities and aircraft during the six months ended June 30, 2025.
Previous report
•Equity securities valued at $23 million received in connection with a divestiture of a business within UPS Digital.
Previous report
•The sale of an equity method investment with a carrying value of $31 million in exchange for a promissory note.
Reworded paragraphs (92)
Previous wording
During the second quarter and first half of 2025, we took several steps in furtherance of this strategy, including continuing our deliberate shift in our business to increase our focus on higher yielding volume. As previously disclosed, we have entered into an agreement with our largest customer that provides for reductions in the volume they ship with us, relative to 2024, by more than 50% by June 2026. Through the first half of 2025, this volume glide-down proceeded as planned, and in the second half 2025, we expect to accelerate the year-over-year pace of decline to close to 30%.
Current wording
During the third quarter and first nine months ( the "year-to-date") periods of 2025, we took several steps in furtherance of this strategy, including continuing our deliberate shift in our business to increase our focus on higher yielding volume. As previously disclosed, we intend to reduce volume from our largest customer by more than 50% by June 2026 from 2024 levels.
Previous wording
Also as previously disclosed, in the first half of 2025 we insourced our former SurePost product, using the UPS network for final mile delivery, and have since replaced it with Ground Saver, a new domestic economy service meant to complement our array of products used by our customers. The insourcing of this product pressured our operating results in both the second quarter and first half of 2025 as pickup and delivery costs were higher than last year. During the second quarter of 2025, we took pricing actions to manage Ground Saver volume and we are working to continue to reduce our costs related to this product.
Current wording
In the first half of 2025, we insourced our former SurePost product, using the UPS network for final mile delivery, and have since replaced it with Ground Saver, a new domestic economy service meant to complement our array of products used by our customers. The insourcing of this product pressured our operating results in both the third quarter and year-to-date periods as pickup and delivery costs were higher than last year. During the nine month period of 2025, we took pricing actions to manage Ground Saver volume and we are working to continue to reduce our costs related to this product.
Previous wording
In the first half of 2025, we completed the previously announced acquisition of Frigo-Trans and Biotech & Pharma Logistics ("Frigo-Trans"), an industry-leading, complex healthcare logistics provider based in Germany. The acquisition has increased our complex cold-chain logistics capabilities internationally. As previously disclosed, in the second quarter of 2025, we entered into an agreement to acquire Andlauer Healthcare Group ("AHG"), a leading North American supply chain management company that offers customized third-party logistics and specialized cold chain transportation solutions for the healthcare sector. This acquisition is expected to close in late 2025, subject to customary regulatory reviews and approvals.
Current wording
In the first quarter of 2025, we completed the acquisition of Frigo-Trans and Biotech & Pharma Logistics ("Frigo-Trans"), an industry-leading, complex healthcare logistics provider based in Germany. The acquisition has increased our complex cold-chain logistics capabilities. In November 2025, we completed the previously announced acquisition of Andlauer Healthcare Group ("AHG"), a leading North American supply chain management company that offers customized third-party logistics and specialized cold chain transportation solutions for the healthcare sector. This acquisition will further extend our global portfolio of end-to-end cold chain capabilities with temperature-controlled and pharmaceutical logistics solutions.
Previous wording
As previously disclosed, our Network of the Future initiative is intended to enhance the efficiency of our network through automation and operational sort consolidation in our U.S. Domestic network. In connection with our strategic execution of planned volume declines from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future and has led and will continue to lead to consolidations of our facilities and workforce as well as an end-to-end process redesign. We launchedour Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration. In connection therewith, we expect to reduce our operational workforce by approximately 20,000 positions. During the second quarter of 2025, we closed daily operations at 74 leased and owned buildings, 68 of which have been permanently closed. We continue to review expected changes in volume in our integrated air and ground network to identify additional buildings for closure.
Current wording
Our Network of the Future initiative is intended to enhance the efficiency of our network through automation and operational sort consolidation in our U.S. Domestic network. In connection with our strategic execution of planned volume declines from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future and has led and could lead to a reduction in the number of our facilities, vehicles and aircraft and workforce as well as an end-to-end process redesign. We launchedour Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration. See Supplemental Information - Items Affecting Comparability for additional discussion of this initiative.
Previous wording
We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations. Our remaining businesses are reported as Supply Chain Solutions.
Current wording
We have two reportable segments: U.S. Domestic Package and International Package, which are together referred to as our global small package operations. Our remaining businesses are reported as Supply Chain Solutions. Our financial results for both the third quarter and year-to-date periods of 2025 reflect the impact of a complex macro environment, driven by evolving trade policies, as well as the significant strategic actions we are taking.
Previous wording
Global trade policy changes including pending and enacted tariffs and the de minimis exclusions took effect during the second quarter of 2025 and resulted in shifting trade lane volumes, particularly reducing volumes on our China to U.S. lane, pressuring our International segment margins during the second quarter. Partially offsetting this decline was growth on other trade lanes, including from China to the rest of the world and the rest of the world into the U.S.
Current wording
Global trade policy changes including pending and enacted tariffs and the de minimis exclusions continued during the third quarter of 2025 and resulted in shifting trade lane volumes, particularly reducing volumes on our China to U.S. lane, pressuring our International segment margins during the third quarter and year-to-date periods.
Previous wording
Supply Chain Solutions revenue decreased in both the second quarter and year-to-date periods of 2025, driven by the impact of the third quarter 2024 divestiture of Coyote and declines in Mail Innovations, Air and Ocean Forwarding, partially offset by growth in certain of our healthcare and digital businesses.
Current wording
Supply Chain Solutions revenue decreased in both the third quarter and year-to-date periods, driven by the impact of the third quarter 2024 divestiture of Coyote, decreases in Air and Ocean Forwarding revenue primarily related to volatility in global trade and declines within Mail Innovations. These decreases were partially offset by growth in certain of our healthcare and digital businesses.
Previous wording
The macro environment is highly uncertain due to changing trade policies and tariff uncertainty. As a global carrier, the eventual outcomes could result in pressure in some parts of our business and create new opportunities in others.
Current wording
The macro environment remains uncertain. As a global carrier, the eventual outcomes of trade policy and tariff uncertainty could result in pressure in some parts of our business, while creating opportunities in others, such as our global brokerage capabilities.
Previous wording
•Average daily package volume in our global small package operations decreased in both the quarter and year-to-date periods driven by our strategic execution of planned volume declines from our largest customer and pricing actions taken on certain e-commerce customers, as well as challenging macroeconomic conditions. The overall decreases in the U.S. Domestic Package segment in both the second quarter and year-to-date periods were partially offset by growth in SMB volume; consolidated volume declines were partially offset by growth in all regions of the International Package segment.
Current wording
•Average daily package volume in our global small package operations decreased in both the quarter and year-to-date periods driven primarily by our strategic execution of planned volume declines from our largest customer and pricing actions taken on certain e-commerce customers, offset in part by growth in the International Package segment.
Previous wording
•Revenue declined in both the quarter and year-to-date periods, driven by the impact of the third quarter 2024 divestiture of Coyote, which contributed $539 million of revenue in the second quarter of 2024 ($1.1 billion year to date in 2024), our strategic execution of planned volume declines from our largest customer, and macroeconomic conditions. These reductions were partially offset by increases in air cargo revenue in our global small package operations and the impact of revenue quality efforts.
Current wording
•Revenue declined in both the quarter and year-to-date periods, driven by the impact of the third quarter 2024 divestiture of Coyote, which contributed $465 million of revenue in the third quarter of 2024 ($1.6 billion year to date in 2024), average daily volume declines described above and decreases in our Mail Innovations business.
Previous wording
Our financial results for both the second quarter and year-to-date periods of 2025 reflect the impact of a complex macro environment, driven by evolving trade policies, as well as the significant strategic actions we are taking. Our global package operations experienced volume declines during the second quarter and year-to-date periods of 2025 due to our strategic execution of planned volume declines from our largest customer and our revenue quality efforts, partially offset by volume growth in all regions of our International business. Overall declines in package volume in both periods were largely offset by growth in revenue per piece due to pricing actions and changes in customer and product mix. Revenue in our global small package operations during the second quarter and year-to-date periods of 2025 benefited from growth in air cargo revenue as we fully onboarded volume under our contract with the U.S. Postal Service ("USPS") during the fourth quarter of 2024.
Current wording
•The revenue impact of the overall declines in package volume in both periods was offset in part by growth in revenue per piece. Revenue in our global small package operations during the third quarter and year-to-date periods of 2025 also benefited from growth in air cargo revenue as we fully onboarded volume under our contract with USPS during the fourth quarter of 2024.
Previous wording
•Operating expenses decreased in both the quarter and year-to-date periods, driven by decreases in purchased transportation and fuel expenses, primarily attributable to the impact of the 2024 divestiture of Coyote and the insourcing of our Ground Saver product. These decreases were partially offset by increases in compensation and benefits and other costs associated with pick up and delivery expenses driven by the insourcing of our Ground Saver Product and increases in purchased transportation rates within Mail Innovations.
Current wording
•Operating expenses decreased in both the third quarter and year-to-date periods, driven by decreases in purchased transportation, primarily attributable to the impact of the 2024 divestiture of Coyote, the insourcing of our Ground Saver product, a gain from sale-leaseback transactions involving real estate properties within Supply Chain Solution businesses and reduced costs in our Mail Innovations business. These decreases were partially offset by increases in compensation and benefits and other costs associated with pick up and delivery expenses driven by the insourcing of our Ground Saver product and the implementation of weekend delivery within Europe.
Previous wording
•Operating profit and operating margin decreased for the quarter (flat year to date) primarily due to lower volumes in the U.S. Domestic Package segment, increased pickup and delivery expense related to insourcing our Ground Saver product and shifting international trade lanes related to trade policy challenges, partially offset by the impact of revenue quality efforts.
Current wording
•Operating profit and operating margin decreased in both periods primarily due to the lower volumes in the U.S. Domestic Package segment, the increased pickup and delivery expenses and shifting international trade lanes related to trade policy challenges, partially offset by the impact of revenue quality efforts.
Previous wording
•We reported quarterly net income of $1.3 billion and diluted earnings per share of $1.51 ($2.5 billion and $2.91 per share, year to date). Non-GAAP adjusted diluted earnings per share for the quarter were $1.55 ($3.04 per share, year to date) after adjusting for the after-tax impacts of:
Current wording
•We reported third quarter 2025 net income of $1.3 billion and diluted earnings per share of $1.55 ($3.8 billion and $4.46 per diluted share, year to date), including $0.30 per diluted share attributable to sale-leaseback transactions described in Supply Chain Solutions within Results of Operations - Segment Review. Non-GAAP adjusted diluted earnings per share for the third quarter of 2025 were $1.74 ($4.78 per diluted share, year to date) after adjusting for the after-tax impacts of:
Previous wording
◦the reversal of an income tax valuation allowance of $13 million, or ($0.02) per diluted share, in the second quarter ($23 million, or ($0.03) per diluted share, year to date); and
Current wording
◦the reversal of an income tax valuation allowance of $86 million, or ($0.10) per diluted share, in the third quarter ($109 million, or ($0.13) per diluted share, year to date);
Previous wording
◦gain on divestiture of $15 million, or ($0.02) per diluted share, in both the second quarter and year to date;
Current wording
◦a gain on divestiture of $15 million, or ($0.02) per diluted share, in the year to date period; and
Previous wording
We exclude the impact of charges related to activities within our transformation strategy. Our transformation strategy activities have spanned several years and are designed to fundamentally change the spans and layers of our organization structure, processes, technologies and the composition of our business portfolio. Our transformation strategy includes initiatives within our Transformation 2.0, Fit to Serve, and Network Reconfigurationand Efficiency Reimagined programs. Various circumstances have precipitated these initiatives, including identification and prioritization of investments, developments and changes in competitive landscapes, inflationary pressures, consumer behaviors, and other factors including post-COVID normalization and volume diversions attributed to our 2023 labor negotiations.
Current wording
We exclude the impact of charges related to activities within our transformation strategy. Our transformation strategy activities have spanned several years and are designed to fundamentally change the spans and layers of our organization structure, processes, technologies and the composition of our business portfolio. Our transformation strategy includes initiatives within our Transformation 2.0, Fit to Serve, and Network Reconfigurationand Efficiency Reimagined programs.
Previous wording
Transformation 2.0: Based on a number of factors including evaluating efficiencies previously gained, and in connection with changes in 2020, we identified and reprioritized certain then-current and future investments, including additional investments in our workforce, portfolio of businesses and technology (such projects, collectively, "Transformation 2.0"). Specifically, we identified opportunities to reduce spans and layers of management, began a review of our business portfolio and identified opportunities to invest in certain technologies, including financial reporting and certain schedule, time and pay systems, to reduce global indirect operating costs, provide better visibility, and reduce reliance on legacy systems and coding languages. As of June 30, 2025, our remaining efforts under Transformation 2.0 include technology initiatives related to our financial systems. Previously completed initiatives within Transformation 2.0 are described in Supplemental Information - Items Affecting Comparabilityin our Annual Report on Form 10-K for the year ended December 31, 2024. Costs associated with Transformation 2.0 have primarily consisted of compensation and benefit costs related to reductions in our workforce and fees paid to third-party consultants. As of June 30, 2025, we have incurred $811 million of costs as part of Transformation 2.0, with anticipated remaining costs of approximately $75 million primarily related to completion of our technology initiatives. We expect any remaining costs to be incurred during 2025. These technology initiatives are expected to provide enhanced reporting quality for both internal and external purposes in part through simplification and standardization of data to better enable migration into cloud-based tools and automation, including transitioning general ledger, consolidation, and planning tools along with U.S. payroll from older programs and software supporting our freight forwarding business. These efforts are expected to reduce the need for future investments and we began realizing benefits therefrom during the second quarter of 2025.
Current wording
Transformation 2.0: Based on a number of factors including evaluating efficiencies previously gained, and in connection with changes in 2020, we identified and reprioritized certain then-current and future investments, including additional investments in our workforce, portfolio of businesses and technology (such projects, collectively, "Transformation 2.0"). Specifically, we identified opportunities to reduce spans and layers of management, began a review of our business portfolio and identified opportunities to invest in certain technologies, including financial reporting and certain schedule, time and pay systems, to reduce global indirect operating costs, provide better visibility, and reduce reliance on legacy systems and coding languages. As of September 30, 2025, our remaining efforts under Transformation 2.0 include technology initiatives related to our financial systems. Previously completed initiatives within Transformation 2.0 are described in Supplemental Information - Items Affecting Comparabilityin our Annual Report on Form 10-K for the year ended December 31, 2024. Costs associated with Transformation 2.0 have primarily consisted of compensation and benefit costs related to reductions in our workforce and fees paid to third-party consultants. As of September 30, 2025, we have incurred $824 million of costs as part of Transformation 2.0, with anticipated remaining costs of approximately $15 million primarily related to completion of our technology initiatives. We expect any remaining costs to be incurred during the remainder of 2025. These technology initiatives are expected to provide enhanced reporting quality for both internal and external purposes in part through simplification and standardization of data to better enable migration into cloud-based tools and automation, including transitioning general ledger, consolidation, and planning tools along with U.S. payroll from older programs and software supporting our freight forwarding business. These efforts are expected to reduce the need for future investments and we began realizing benefits therefrom during the second quarter of 2025.
Previous wording
Fit to Serve: In 2023, a number of factors, including macroeconomic headwinds and volume diversion resulting from our labor negotiations with the International Brotherhood of Teamsters, contributed to volume declines in our U.S. Domestic Package business. In addition, our International Package and Supply Chain Solutions businesses were also negatively impacted by a number of challenging macroeconomic conditions during 2023. In response to these factors, we undertook our Fit to Serve initiative with the intent to right-size our business to create a more efficient operating model that was more responsive to market dynamics through a workforce reduction of approximately 14,000 positions, primarily within management. As of June 30, 2025, we have incurred total costs of $444 million under Fit to Serve, which primarily consist of benefit costs related to reductions in our workforce. We expect to incur remaining costs of approximately $20 million in 2025 as a part of this initiative, which should be complete in 2025. We have achieved savings of approximately $1.0 billion through this program via reductions in our compensation and benefit expense.
Current wording
Fit to Serve: In 2023, a number of factors, including macroeconomic headwinds and volume diversion resulting from our labor negotiations with the International Brotherhood of Teamsters, contributed to volume declines in our U.S. Domestic Package business. In addition, our International Package and Supply Chain Solutions businesses were also negatively impacted by a number of challenging macroeconomic conditions during 2023. In response to these factors, we undertook our Fit to Serve initiative with the intent to right-size our business to create a more efficient operating model that was more responsive to market dynamics through a workforce reduction of approximately 14,000 positions, primarily within management. As of September 30, 2025, we have incurred total costs of $463 million under Fit to Serve, which primarily consist of benefit costs related to reductions in our workforce. We expect to incur remaining costs of approximately $10 million in 2025 as a part of this initiative, which should be complete in 2025. We have achieved savings of approximately $1.0 billion through this program via reductions in our compensation and benefit expense.
Previous wording
Network Reconfiguration and Efficiency Reimagined: As previously disclosed, our Network of the Future initiative is intended to enhance the efficiency of our network through automation and operational sort consolidation in our U.S. Domestic network. In connection with our strategic execution of planned volume declines from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future and has led and will continue to lead to consolidations of our facilities and workforce as well as an end-to-end process redesign. We launchedour Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration. In connection therewith, we expect to reduce our operational workforce by approximately 20,000 positions. During the second quarter of 2025, we closed daily operations at 74 leased and owned buildings, 68 of which have been permanently closed. We continue to review expected changes in volume in our integrated air and ground network to identify additional buildings for closure.
Current wording
Network Reconfiguration and Efficiency Reimagined: Our Network of the Future initiative is intended to enhance the efficiency of our network through automation and operational sort consolidation in our U.S. Domestic network. In connection with our strategic execution of planned volume declines from our largest customer, we began our Network Reconfiguration initiative, which is an expansion of Network of the Future and has led and could lead to a reduction in the number of our facilities, vehicles and aircraft and workforce as well as an end-to-end process redesign. We launchedour Efficiency Reimagined initiatives to undertake the end-to-end process redesign effort which will align our organizational processes to the network reconfiguration. In connection therewith, we have reduced our U.S. operational workforce by approximately 34,000 positions and closed daily operations at 93 leased and owned buildings, 85 of which have been permanently closed in the first nine months of 2025. We continue to review expected changes in volume in our integrated air and ground network to identify additional buildings for closure. As of September 30, 2025, we have realized cost savings of approximately $2.2 billion and expect to achieve $3.5 billion total cost savings in 2025, from this initiative.
Previous wording
In connection with the Network Reconfigurationand Efficiency Reimagined programs, we expect to exclude between $400 and $650 million in non-GAAP adjusted expense during 2025, related primarily to third-party consulting fees, employee separation benefits and certain programmatic expenses. We expect the costs associated with these actions may increase should we determine to close additional buildings. In addition, we believe that workforce reductions may require a remeasurement of certain U.S. pension and postretirement benefit plan obligations and assets during 2025. We are not yet able to estimate the timing of potential impact of such an event. As of June 30, 2025, we have incurred costs related to these programs of $126 million. We have begun to realize the expected benefits from these programs and, as previously disclosed, expect to achieve $3.5 billion in savings from these programs in 2025.
Current wording
In connection with the Network Reconfigurationand Efficiency Reimagined programs, we expect to exclude between $400 and $650 million in non-GAAP adjusted expense during 2025, related primarily to third-party consulting fees, employee separation benefits and certain programmatic expenses. We expect the costs associated with these actions may increase should we determine to close additional buildings. As of September 30, 2025, we have incurred program costs to date of $422 million, including $387 million year to date. These initiatives are expected to conclude in 2027.
Previous wording
In addition, we have incurred and expect to continue to incur other costs and benefits associated with our Network Reconfiguration programs and anticipated lower volumes, including early asset retirement, lease related costs and gains from the sale of properties. It is our intention to exit or abandon leases, sell property and transfer or dispose of equipment associated with closed facilities. During the first half of 2025, we incurred $37 million in accelerated depreciation and asset retirement obligations related to closed facilities and abandoned equipment and $34 million in gains on sale of properties. We expect the costs associated with these actions may increase should we determine to close additional buildings.
Current wording
In addition, we have incurred and expect to continue to incur other costs and benefits associated with our Network Reconfiguration programs and anticipated lower volumes, including early asset retirement, lease related costs and gains from the sale of properties. It is our intention to exit or abandon leases, sell property and transfer or dispose of equipment associated with closed facilities. During the first nine months of 2025, we incurred $45 million in accelerated depreciation and asset retirement obligations related to closed facilities and abandoned equipment and $54 million in gains on sale of properties. We expect the costs associated with these actions may increase should we determine to close additional buildings.
Previous wording
We exclude the impact of goodwill and asset impairment charges, including impairments of certain long-lived assets and equity method investments, which we do not consider when evaluating the operating performance of our business units, making decisions to allocate resources or in determining incentive compensation awards. For more information regarding goodwill and asset impairment charges, see note 5 and note 8 to the unaudited, consolidated financial statements.
Current wording
We exclude the impact of goodwill and certain asset impairment charges, including impairments of long-lived assets and equity method investments. We do not consider these non-cash charges when evaluating the operating performance of our business units, making decisions to allocate resources or in determining incentive compensation awards. For more information regarding goodwill and asset impairment charges, see note 5 and note 8 to the unaudited, consolidated financial statements.
Previous wording
We exclude the impact of a payment to settle an international tax regulatory matter from the second quarter of 2024. We do not believe this payment was a component of our ongoing operations and we do not expect this or similar payments to recur. For more information regarding this matter, see note 10 in our Annual Report on Form 10-K for the year ended December 31, 2024.
Current wording
We have excluded the impact of a payment to settle a previously-disclosed international tax regulatory matter. We do not believe this payment was a component of our ongoing operations and we do not expect this or similar payments to recur. For more information regarding this matter, see note 10 in our Annual Report on Form 10-K for the year ended December 31, 2024.
Previous wording
We exclude the impact of gains (or losses) related to the divestiture of certain businesses. We do not consider these transactions when evaluating the operating performance of our business units, making decisions to allocate resources or in determining incentive compensation awards. For more information regarding gains and losses related to divestitures, see note 18 to the unaudited, consolidated financial statements.
Current wording
We exclude the impact of gains (or losses) related to the divestiture of businesses. We do not consider these transactions to be a component of our ongoing operations, nor do we consider the impact of these transactions when evaluating the operating performance of our business units, making decisions to allocate resources or in determining incentive compensation awards.
Previous wording
We previously recorded non-GAAP adjustments for transactions that resulted in capital loss deferred tax assets not expected to be realized. We now expect a portion of these capital losses to be realized in future periods. We supplement our presentation with non-GAAP measures that exclude the impact of subsequent changes in the valuation allowances against these deferred tax assets as we believe such treatment is consistent with how the valuation allowance was initially established. For more information regarding the reversal of this income tax valuation allowance, see note 16 to the unaudited, consolidated financial statements.
Current wording
We previously recorded non-GAAP adjustments for transactions that resulted in capital loss deferred tax assets not expected to be realized. As a result of property sales during 2025, we now expect all of these capital losses to be realized. We supplement our presentation with non-GAAP adjusted financial measures that exclude the impact of the reversals of the valuation allowances against these deferred tax assets as we believe such treatment is consistent with how the valuation allowance was initially established.
Previous wording
Certain operating expenses are allocated between our reporting segments using activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Changes in these estimates would directly impact the amount of expense allocated to each segment and therefore the operating profit of each reporting segment. Our allocation methodologies are refined periodically, or as necessary to reflect changes in our businesses. There were no significant changes to our allocation methodologies in the second quarter of 2025.
Current wording
Certain operating expenses are allocated between our reporting segments using activity-based costing methods. These activity-based costing methods require us to make estimates that impact the amount of each expense category that is attributed to each segment. Our allocation methodologies are refined periodically, or as necessary to reflect changes in our businesses. There were no significant changes to our allocation methodologies in the third quarter of 2025.
Previous wording
As a normal part of managing our air network, we routinely idle aircraft and engines temporarily for maintenance or to adjust network capacity. As of June 30, 2025, we had five aircraft temporarily idled for an average period of approximately eight months in order to better match capacity with current demand. Temporarily idled assets are classified as held-and-used, and we continue to record depreciation expense for these assets. We expect these aircraft to return to revenue service during the second half of 2025. During the second quarter of 2025, we retired two fully depreciated MD-11s from operational service. We continue to evaluate possible retirements within our fleet and expect to retire one fully depreciated MD-11 from operational service in the second half of 2025.
Current wording
As a normal part of managing our air network, we routinely idle aircraft and engines temporarily for maintenance or to adjust network capacity. As of September 30, 2025, we had five aircraft temporarily idled for an average period of approximately eight months in order to better match capacity with current demand. Temporarily idled assets are classified as held-and-used, and we continue to record depreciation expense for these assets. We expect these aircraft to return to operational service during the fourth quarter of 2025. During the nine months ended September 30, 2025, we retired two fully depreciated MD-11s from operational service. We continue to evaluate possible retirements within our fleet and expect to retire one fully depreciated MD-11 from operational service in the fourth quarter of 2025.
Previous wording
Approximately $1.2 billion of our consolidated goodwill balance of $4.8 billion is represented by our Global Freight Forwarding, Roadie and Global Logistics and Distribution reporting units which, based on our July 1, 2024 annual impairment evaluation, exhibited a limited excess of fair value above carrying value and reflect a greater risk of an impairment occurring in future periods. During the first quarter of 2025, our Mail Innovations reporting unit experienced cost increases higher than our expectations due to increases in purchased transportation rates, resulting from the expiration of a contract with our primary vendor. These cost increases began to dissipate in the second quarter of 2025 as we started utilizing alternative vendors. In the second quarter of 2025, we also took action to address the revenue quality in this business, and experienced improvements therein. Depending on the outcome of these actions, our expectations for the future performance of this reporting unit could be materially affected. Approximately $295 million in goodwill is represented by our Mail Innovations reporting unit. Additionally, Frigo-Trans, which was acquired during the first half of 2025, is now reported as part of our Healthcare Logistics and Distribution reporting unit.
Current wording
Additionally, beginning in the first quarter of 2025, our Mail Innovations reporting unit experienced cost increases in excess of our expectations due to increases in purchased transportation rates, resulting from the expiration of a contract with our primary vendor. These cost increases began to dissipate in the second quarter of 2025 as we started utilizing alternative vendors. In the second quarter of 2025, we also took action to address the revenue quality in this business, and began to experience improvements therein. Depending on the outcome of these actions, our expectations for the future performance of this reporting unit could be materially affected. Approximately $295 million in goodwill is represented by our Mail Innovations reporting unit included in Supply Chain Solutions.
Previous wording
We continue to monitor all of our reporting units subsequent to the most recent annual test and, while we do not believe it is more likely than not that our reporting units' fair values are less than their carrying values as of June 30, 2025, challenging macroeconomic and uncertain geopolitical conditions, changes in global trade policy, actual reporting unit performance, revisions to our forecasts of future performance or other factors, including market comparables, may negatively impact certain estimates and assumptions that we use in determining our reporting units' fair values. Such impacts may be more pronounced for reporting units whose fair values do not significantly exceed their carrying values. Any of these factors or a combination thereof could result in an impairment charge in one or more of our reporting units during a future period.
Current wording
We continue to monitor our reporting units subsequent to the annual test and while we do not believe it is more likely than not that our reporting units' fair values are less than their carrying values as of September 30, 2025, challenging macroeconomic and uncertain geopolitical conditions, actual reporting unit performance, revisions to our forecasts of future performance or other factors, including market comparables, may negatively impact certain estimates and assumptions that we use in determining our reporting units' fair values. Such impacts may be more pronounced for reporting units whose fair values do not significantly exceed their carrying values. These factors or a combination thereof could result in a non-cash impairment charge in one or more of our reporting units during a future period.
Previous wording
Comparative results were impacted by one less operating day in the first half of 2025. The growth in rates and product mix shown above includes the growth we experienced in our air cargo product during both the second quarter and the year-to-date periods in 2025, as air cargo under our contract with the USPS was fully onboarded during the fourth quarter of 2024. Air cargo is measured by dimensional weight, not on a per piece basis, and therefore does not impact the volume and revenue per piece discussions below.
Current wording
Comparative results were impacted by one less operating day in the nine months ended September 30, 2025. The growth in rates and product mix shown above includes the growth in our air cargo product during both the third quarter and the year-to-date periods in 2025, as air cargo under our contract with the USPS was fully onboarded during the fourth quarter of 2024. Air cargo is measured by dimensional weight, not on a per piece basis, and therefore does not impact the volume and revenue per piece discussions below.
Previous wording
Average daily volume decreased for both the quarter and year-to-date periods, driven by our strategic execution of planned volume declines from our largest customer and decreases in our Ground Saver product as a result of our pricing actions on certain e-commerce volume, as well as macro dynamics on market demand. As a result, residential and commercial volume decreased for both the quarter and year-to-date periods. Business-to-business volume decreased 2.3% in the quarter (down 0.5% year to date), primarily driven by demand softness within the manufacturing and retail sectors partially offset by continued volume growth from SMBs who leverage our Digital Access Program and growth in returns. Business-to-consumer volume decreased 10.9% in the quarter (down 9.0% year to date), as a result of the factors discussed above, with declines from large customers, partially offset by continued growth in SMB from our Digital Access Program.
Current wording
Residential ("business-to-consumer") and commercial ("business-to-business") volume decreased for both the quarter and year-to-date periods. Business-to-business volume decreased 4.8% for the quarter (down 1.9% year to date), primarily driven by demand softness within the retail and manufacturing sectors. Business-to-consumer volume decreased 17.6% for the quarter (down 11.9% year to date), as a result of the planned volume declines and pricing actions discussed above. These overall declines were partially offset by continued growth from SMBs who leveraged our Digital Access Program.
Previous wording
Within our Air products, average daily volume decreased 11.6% in the quarter (down 10.6% year to date), driven by the continued execution under the contract terms with our largest customer, partially offset by increased demand from the healthcare and technology sectors.
Current wording
Within our Air products, average daily volume decreased 13.9% for the quarter (down 11.7% year to date), driven by the continued execution of planned volume declines from our largest customer, partially offset by increased demand from customers in the healthcare and technology sectors.
Previous wording
Ground average daily volume decreased 6.6% for the quarter (down 4.6% year to date) driven by residential volume decreases of 10.0% for the quarter (down 7.9% year to date) which were primarily due to pricing actions we took, as described above.
Current wording
Ground average daily volume decreased 12.0% for the quarter (down 7.1% year to date) driven by residential volume decreases of 17.4% for the quarter (down 11.2% year to date) which were primarily as a result of the pricing actions discussed above.
Previous wording
Revenue per piece increased 5.5% for the quarter (up 5.0% year to date) due to favorable trends in customer and product mix as a result of the pricing actions discussed above. Package characteristics and fuel surcharges also contributed to the increase in revenue per piece.
Current wording
Revenue per piece increased 9.8% for the quarter (up 6.5% year to date), with increases in both Air and Ground products due to favorable trends in customer and product mix as a result of pricing actions we are taking. Changes in package characteristics and fuel surcharges also contributed to the increase in revenue per piece.
Previous wording
Revenue per piece from both our Air and Ground products increased for both the quarter and year-to-date periods. In December 2024, we implemented an average 5.9% net increase in base and accessorial rates for both our Air and Ground products.
Current wording
In December 2024, we implemented an average 5.9% net increase in base and accessorial rates for both our Air and Ground products, which also contributed to the increase.
Previous wording
•Air cargo expense increased $180 million for the quarter (up $258 million year to date) as we fully onboarded our contract with the USPS during the fourth quarter of 2024.
Current wording
•Air cargo expense increased $64 million for the quarter (up $490 million year to date) as we fully onboarded our contract with the USPS during the fourth quarter of 2024.
Previous wording
Our non-GAAP adjusted operating expenses exclude the impact of asset impairment charges of $5 million in the 2024 year-to-date period as well as transformation strategy costs of $66 and $8 million within the U.S. Domestic Package segment in the second quarters of 2025 and 2024, respectively and $98 and $17 million in the 2025 and 2024 year-to-date periods, respectively. Transformation strategy costs reflected within the U.S. Domestic Package segment during the 2025 and 2024 periods relate to our Fit to Serve and Transformation 2.0 programs. These costs in the 2025 periods also include costs related to our Network Reconfiguration and Efficiency Reimagined programs. Within these programs, we incurred compensation and benefits costs, as well as fees paid to outside professional service providers. See Supplemental Information - Items Affecting Comparability for additional discussion of transformation strategy costs excluded from our non-GAAP financial measures.
Current wording
Our non-GAAP adjusted operating expenses exclude the impact of transformation strategy costs of $302 and $76 million in the third quarters of 2025 and 2024, respectively, and $400 and $93 million in the 2025 and 2024 year-to-date periods, respectively. The 2024 year-to-date period non-GAAP adjusted operating expenses also excluded asset impairment charges of $5 million. Transformation strategy costs during both the 2025 and 2024 periods relate to our Fit to Serve and Transformation 2.0 programs. The costs in the 2025 periods also include costs related to our Network Reconfiguration and Efficiency Reimagined programs. Within these programs, we incurred compensation and benefits costs, as well as fees paid to outside professional service providers. See Supplemental Information - Items Affecting Comparability for additional discussion of transformation strategy costs excluded from our non-GAAP financial measures.
Previous wording
Cost per piece increased 6.1% during the second quarter of 2025 (up 4.9% year to date). Non-GAAP adjusted cost per piece increased 5.6% during the second quarter of 2025 (up 4.6% year to date). The increase in cost per piece was primarily driven by increased compensation and benefits costs from Ground Saver volume in addition to lower average daily volume, due primarily to the strategic execution of planned volume declines from our largest customer as discussed above, which were not fully offset by the benefits of our cost saving initiatives.
Current wording
Cost per piece increased 12.3% during the third quarter of 2025 (up 7.2% year to date). Non-GAAP adjusted cost per piece increased 10.4% during the third quarter of 2025 (up 6.4% year to date). The increase in cost per piece was primarily driven by increased compensation and benefits costs from the insourcing of our Ground Saver product in addition to lower average daily volume. These impacts were not fully offset by the benefits of our cost-saving initiatives.
Previous wording
Comparative results were impacted by one less operating day in the first half of 2025. Global trade policy changes including enacted tariffs and the de minimis exclusions took effect during the second quarter and resulted in shifting trade lane volumes and reduced segment margin.
Current wording
Comparative results were impacted by one less operating day in the year-to-date period ended September 30, 2025. Global trade policy changes, including the de minimis exclusions, resulted in shifting trade lane volumes and reduced segment margin in both 2025 periods.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
Various circumstances precipitated these initiatives, including identification and prioritization of certain investments, developments and changes in competitive landscapes, inflationary pressures, consumer behaviors, and other factors including post-COVID normalization and volume diversions attributed to our 2023 labor negotiations.
Current report — wording carried from elsewhere
Average daily volume decreased for both the quarter and year-to-date periods, driven by our strategic execution of planned volume declines from our largest customer, challenging market conditions and decreases in our Ground Saver product as a result of pricing actions we are taking with respect to certain e-commerce volume.
Current report — wording carried from elsewhere
These decreases were partially offset by:
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
In addition, we have incurred and expect to continue to incur other costs and benefits associated with our Network Reconfiguration programs and anticipated lower volumes, including early asset retirement, lease related costs and gains from the sale of properties. It is our intention to exit or abandon leases, sell property and transfer or dispose of equipment associated with closed facilities. During the first half of 2025, we incurred $37 million in accelerated depreciation and asset retirement obligations related to closed facilities and abandoned equipment and $34 million in gains on sale of properties. We expect the costs associated with these actions may increase should we determine to close additional buildings.
Previous report — wording carried elsewhere
(1) Amount represents the change in currency translation compared to the prior year.
Previous report — wording carried elsewhere
Non-GAAP adjusted operating expenses exclude the impact of:
Previous report — wording carried elsewhere
Non-cash investing activities for the six months ended June 30, 2025 include: