Why Shares in UPS Declined by 20% in the First Half of 2025

Shares in United Parcel Service (UPS), the global logistics giant, experienced a significant downturn in the first half of 2025, plummeting by 20% according to data compiled by S&P Global Market Intelligence. This substantial decline has raised concerns among investors, primarily stemming from the company's struggle to meet its initial full-year guidance amidst an escalating global trade tariff dispute. The ongoing trade tensions have directly impacted delivery volumes, creating a challenging operating environment for UPS.

The Impact of Trade Tariffs on Delivery Volumes

The primary catalyst for UPS's stock underperformance has been the persistent and intensifying trade tariff dispute between major global economies. These tariffs have led to a noticeable slowdown in international trade, directly reducing the demand for shipping and logistics services. As a company heavily reliant on cross-border commerce, UPS has felt the brunt of this economic friction. Businesses, facing increased costs and uncertainty, have scaled back their international shipments, leading to a tangible decrease in package volumes for carriers like UPS.

This reduction in volume is not merely a short-term blip; it signals a potential shift in global supply chains as companies seek to mitigate tariff impacts by localizing production or diversifying their sourcing. Such structural changes could have long-term implications for global freight forwarders.

Investor Concerns and Guidance Revisions

Investors are increasingly stressing the company's ability to achieve its previously announced financial targets for the full year. At the beginning of 2025, UPS had provided optimistic guidance, anticipating robust growth in both revenue and profitability. However, the unforeseen persistence and severity of the trade dispute have cast a shadow over these projections. Analysts are now widely anticipating a downward revision of UPS's full-year guidance, which would further erode investor confidence and potentially trigger additional sell-offs.

The market's reaction reflects a broader concern about the predictability of earnings in a volatile geopolitical landscape. Companies with significant international exposure, like UPS, are particularly vulnerable to such macro-economic headwinds.

Broader Market Context and Sector Performance

The challenges faced by UPS are not entirely isolated. The broader transportation and logistics sector has also experienced headwinds in the first half of 2025, albeit to varying degrees. Companies involved in air freight, ocean shipping, and even domestic trucking have reported softening demand in certain segments. This indicates a systemic pressure on global supply chains, extending beyond just the parcel delivery segment. Economic indicators, such as manufacturing PMIs and global trade indices, have also shown signs of contraction or stagnation, reinforcing the narrative of a challenging environment for logistics providers.

Furthermore, the rise of e-commerce, while generally a tailwind for parcel delivery, has also intensified competition, particularly in the last-mile delivery segment. While UPS benefits from e-commerce growth, the current macro environment is overshadowing these benefits.

Investment Insights and Outlook

For investors, the 20% decline in UPS shares presents both risks and potential opportunities. The immediate risk lies in the continued uncertainty surrounding global trade and the potential for further guidance cuts. Investors should closely monitor upcoming earnings calls for revised forecasts and management's strategy to navigate the current environment. Key metrics to watch include international package volume trends, average revenue per piece, and operating margins.

On the opportunity side, a significant price correction might make UPS an attractive long-term investment for those who believe the trade disputes will eventually subside and global trade will rebound. UPS possesses a robust global network, strong brand recognition, and a diversified customer base. However, a recovery would likely be contingent on a de-escalation of trade tensions and a stabilization of global economic growth. Investors should consider the company's dividend yield and its long-term strategic initiatives, such as automation and network optimization, which could enhance efficiency and profitability once market conditions improve. Diversification within the logistics sector or across different industries could also be a prudent strategy during periods of high volatility.