But lately, things have changed. The company’s stock has collapsed from its pandemic highs, falling as much as 58% in some of the positions I manage. Across three separate accounts, I recently made the difficult decision to sell, locking in significant tax losses. Those losses hurt, but they also provide an opportunity: by harvesting them now, I can re-enter UPS stock after my wash sale period expires on September 27, 2025, and likely at a lower price.
In this article, I’ll outline where UPS went wrong, why I believe current leadership is failing, the risks of its restructuring strategy, and why I still see value in the company long term—just not until some course corrections are made.
UPS’s Dual Identity: Parcel Deliverer and Freight Carrier
Most people know UPS for package delivery. But the company is much more than that. It is also a major LTL and TL freight operator, handling large shipments for corporate clients. Historically, this dual model—retail parcel delivery plus industrial freight—helped UPS stay resilient. When consumer demand was weak, freight could pick up the slack, and vice versa.
But the balance only works if the company manages costs and volumes carefully. This is where the problems began.
Leadership Missteps: A Costly Parallel to Yellow Freight
UPS’s current CEO has made several strategic decisions that, in my view, have weakened the company’s competitive position. The most glaring is the recent labor contract with the Teamsters union. She negotiated what is now the highest compensation package in the industry. On paper, this was pitched as a way to secure stability, avoid a strike, and keep customers confident in UPS’s ability to deliver.
In reality, it saddled UPS with massive labor costs at a time when freight demand is under pressure. Transportation is an industry of thin margins. Paying materially above competitors is not sustainable.
This mistake feels all too familiar. Investors in transportation remember Yellow Freight, once a giant LTL carrier that collapsed under the weight of bloated labor costs and an inability to adapt. UPS is not at risk of bankruptcy tomorrow, but the strategic parallels are striking—and troubling.
The Customer Shift: Turning Away From Amazon
At the same time, UPS has attempted to pivot away from lower-priced freight contracts. Most notably, it has pulled back from handling Amazon’s high-volume, low-margin shipments. The idea was to focus on “higher value” customers who generate more revenue per shipment.
In theory, that sounds smart. Why haul packages for pennies when you can prioritize premium accounts? But in practice, this shift has created a hole in UPS’s shipping volume. High-volume contracts like Amazon help keep trucks and planes full, offsetting fixed costs. Losing that volume leaves excess capacity, which makes the already expensive labor contracts even harder to absorb.
Even management seems to be realizing the mistake now—but lost business is not easily regained. Competitors such as FedEx, Old Dominion, and Amazon’s own logistics arm are more than happy to step in.
A “Desperate” Vote of Confidence
In what I view as a desperate attempt to restore investor confidence, the CEO recently invested a large sum of her own money into UPS stock after the share price plunged. Insiders buying their own stock is often touted as a positive signal—that management is aligned with shareholders.
But in this case, it looks more like a publicity maneuver. A personal investment cannot undo structural mistakes in labor contracts and customer strategy. Shareholders need sound management and profitable execution, not symbolic gestures.
If anything, the move reinforces my belief that leadership change is necessary. A new CEO with proven experience in managing labor-intensive, low-margin businesses would give UPS the reset it badly needs.
The Restructuring in Progress
The restructuring at UPS is centered on three main pillars:
-
Absorbing labor costs. Management must now find operational efficiencies to offset the most expensive union contract in the industry.
-
Customer re-segmentation. UPS is deliberately chasing “premium” customers, but this risks hollowing out volume and leaving the company vulnerable to competitors.
-
Network adjustments. Hubs, routes, and aircraft utilization are being recalibrated to align with new volumes. This process is costly, disruptive, and will take years to complete.
In theory, this restructuring is about positioning UPS for more profitable growth. In practice, it has created investor uncertainty and led to a rapid stock sell-off.
The Investor’s View: Dividends and Timing
Despite all these missteps, UPS continues to pay a dividend. For income-focused investors, this is an anchor of stability. I ensured that across my accounts, the next dividend distribution will be collected before my wash sale repurchase window begins.
The long-term investment case for UPS is not broken. The company is too large, too entrenched, and too critical to global commerce to simply fade away. But leadership has weakened its near-term outlook. That’s why I harvested losses now, preserving tax benefits, and will look to re-enter after September 27, 2025, at what I expect will be lower valuations.
This approach also allows me to balance dividend income with prudent timing—an important consideration given the steep decline from pandemic-era highs.
Why the CEO Needs to Go
The central problem at UPS is not its business model, its employees, or even the freight market cycle—it is leadership.
The current CEO’s track record is defined by:
-
Overpaying in labor negotiations, leaving UPS with the highest costs in the industry.
-
Misjudging customer mix, alienating Amazon and other volume clients.
-
Resorting to symbolic insider stock purchases to try to calm investors.
None of these are hallmarks of effective stewardship. A leadership change is essential if UPS wants to restore investor confidence, win back lost business, and stabilize its cost structure.
Conclusion
UPS’s current troubles reflect more than just a weak freight market. They reflect strategic errors at the top that have compounded into real financial pain for shareholders. The company has followed a path alarmingly similar to Yellow Freight—prioritizing expensive labor contracts while chasing a flawed customer mix.
For investors like me, the result has been heavy losses. Across three accounts, I have realized declines of up to 58%. But by harvesting losses now, collecting dividends, and preparing to re-enter after the wash sale period on September 27, 2025, I believe there is still a long-term case for UPS—especially once leadership changes.
The company’s infrastructure, brand, and role in global commerce are too important to ignore. But until the CEO is replaced and restructuring proves credible, UPS will remain a cautionary tale in how even a giant can stumble when management loses focus.
Disclaimer
This article reflects my personal views as an investor. It is not financial advice. I am not a licensed financial advisor. Please conduct your own research or consult a qualified professional before making any investment decisions.
