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") due to geopolitical tensions.

Domestic average daily volume decreased 9.1% for the quarter (down 7.7% year to date) due primarily to the impact of our revenue quality actions in EMEA as we shifted our focus toward premium sectors.

Export average daily volume decreased 8.3% for the quarter (down 6.1% year to date) led by declines in EMEA intra-regional volumes due primarily to our revenue quality actions and the continued Middle East conflict. Total U.S. import average daily volume also decreased in both periods as changes in trade policies, including de minimis exclusions, continued to affect customer demand and shipping patterns, although the impact began to moderate in September as the business lapped the initial implementation. These declines were partially offset by higher demand on China-to-U.S. and Asia-to-Asia trade lanes for both periods.

Revenue Per Piece

Revenue per piece increased 15.0% for the quarter (up 14.9% year to date), primarily driven by fuel surcharges, revenue quality actions and favorable trade lane mix. Foreign currency movements partially offset the increase for the quarter, but favorably impacted revenue per piece for the year-to-date period.

Domestic revenue per piece increased 9.9% for the quarter (up 12.9% year to date) primarily driven by fuel surcharges, surge fees and shifts in customer mix, mainly in EMEA and Canada.

Export revenue per piece increased 15.9% for the quarter (up 14.6% year to date) primarily driven by fuel surcharges, favorable trade lane mix, particularly in Asia, and revenue quality actions across Asia and EMEA.

Fuel Surcharges

Our contracts include provisions designed to help offset cost volatility resulting from changes in fuel prices. The fuel surcharges represent one of many components of our pricing structure that can impact our overall revenue and revenue per piece. Revenue from these surcharges contributed 8.4% and 6.2% to the change in revenue for the quarter and year-to-date periods, respectively, primarily as a result of increases in fuel prices.

Operating expenses increased $264 million for the quarter (up $1.1 billion year to date), including unfavorable currency impacts in the year-to-date period. Integrated air and ground network costs increased $274 million for the quarter (up $875 million year to date) reflecting higher fuel expense and increased charter and lease utilization expenses, net of vendor recoveries resulting from network disruptions.

Non-GAAP adjusted operating expenses exclude transformation strategy costs of $0 and $15 million in the third quarters of 2026 and 2025, respectively, and $4 and $38 million in the year-to-date periods, respectively. Transformation strategy costs during both 2026 and 2025 periods relate to our Network Reconfiguration and Efficiency Reimagined initiatives. The 2025 period also included 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 and other costs and gains excluded from our non-GAAP financial measure.