UNITED PARCEL SERVICE INC

International Package

(1)Net of currency hedging; amount represents the change in currency translation compared to the prior year.

Revenue

The change in revenue was due to the following:

Volume

Average daily volume decreased for both domestic and export products for the quarter and year-to-date periods, primarily in Europe, the Middle East and Africa ("EMEA").

Domestic average daily volume decreased 7.5% for the quarter (down 7.1% year to date) primarily driven by domestic standard product declines in EMEA and our revenue quality efforts.

Export average daily volume decreased 4.2% for the quarter (down 4.9% year to date) led by declines in EMEA intra-regional movements due to our revenue quality efforts, and in U.S. destination lanes resulting from trade policy changes, including de minimis exclusions. Total U.S. import average daily volume decreased led by average daily volume declines from EMEA global trade policy changes, including de minimis exclusions. The decline was partially offset by higher demand on the Asia to U.S. trade lane, led by China outbound volume, as we lapped the elimination of the de minimis in May 2026.

Revenue Per Piece

Revenue per piece increased 18.9% for the quarter (up 14.8% year to date), with increases in all regions due to improvement in geographic mix and shifts in trade lanes, particularly in Asia. The increases were primarily driven by our fuel surcharges and revenue quality actions.

Domestic revenue per piece increased 13.1% for the quarter (up 14.4% year to date) primarily driven by fuel surcharges and shifts in customer mix, mainly in EMEA and Canada.

Export revenue per piece increased 18.7% for the quarter (up 14.0% year to date) primarily driven by fuel surcharges and favorable customer and product mix shift.

Fuel Surcharges

The fuel surcharge we apply to international air services originating inside or outside the U.S. is largely indexed to the DOE's Gulf Coast spot price for a gallon of kerosene-type jet fuel. The fuel surcharges for ground services originating outside the U.S. are indexed to fuel prices in the region or country where the shipment originates. During the quarter and year-to-date period, fuel surcharge revenue increased $429 million for the quarter (up $452 million year to date) primarily due to the Middle East conflict. Most of our fuel surcharges adjust with fuel prices on a weekly basis and are intended to mitigate the impact of fuel price volatility.

Operating expenses increased $608 million for the quarter (up $869 million year to date), including unfavorable currency movement. Integrated air and ground network costs increased $482 million (up $602 million year to date) as we continued to align our global network in response to the Middle East conflict. These cost increases were primarily due to increased fuel and charter utilization expenses associated with network disruptions, along with aircraft maintenance.

Our non-GAAP adjusted operating expenses exclude the impact of $0 and $10 million of transformation strategy costs in the second quarters of 2026 and 2025, respectively, and $4 and $23 million in the 2026 and 2025 year-to-date periods, respectively. Transformation strategy costs during 2026 and 2025 periods relate to our Network Reconfiguration and Efficiency Reimagined programs. The costs in the 2025 periods also include costs related to our Transformation 2.0 and Fit to Serve programs, which primarily consisted of compensation and benefits costs and 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.