Dive Brief:
- UPS sent about 977,000 parcels a day to the U.S. Postal Service for last-mile delivery in Q1 as part of a relaunched Ground Saver agreement between the two carriers, UPS CEO Carol Tomé said on an earnings call Tuesday.
- Tomé said that the level of delivery activity equates to about 44% of volume for Ground Saver, an economy shipping service. She described Q1 as a ramp-up for the two parties, as they had to "work through dual labeling" and other transition requirements.
- UPS aims to increase its Postal Service handoffs in Q2, with roughly 1.5 million packages per day expected to be tendered to the agency, according to Tomé.
Dive Insight:
UPS previously used the Postal Service for Ground Saver back when the service was called SurePost, but UPS fully insourced that volume in 2025 as the carrier flagged cost and reliability concerns tied to strategy changes at the Postal Service.
"This change provided us greater operational control and service quality with respect to this product," UPS said in its 2025 financial report. "However, this insourcing pressured our operating results, as pickup and delivery costs were higher than in 2024."
Last year, the two sides reopened discussions and eventually reached a new deal following the appointment of David Steiner as the Postal Service's next postmaster general. Handoffs began happening in January. The renewed partnership, which also includes UPS Mail Innovations volume, will boost efficiency within UPS' in-house delivery operations while reducing the carrier's cost per piece, according to Tomé.
"We've just kind of completed the ramp up," she said. "So now we're going to start to see some benefits from that move."
Boosting profitability on a per-package basis has been a priority for UPS as it reduces the volume it delivers for Amazon, a major customer. To achieve that, UPS is working to attract packages from more lucrative customer segments like small businesses. At the same time, UPS is "leaning away from" lower-yielding deliveries — such as volume from China e-commerce retailers — and letting other carriers absorb those packages, Tomé said.
"We've offered that volume to the market so that we can focus on the premium side,” she said.
UPS executives didn't disclose how much Ground Saver volume increased or decreased in Q1 compared to the year prior, but in Q4, Ground Saver's average daily volume fell 27.7% year over year.
