5 Things Every UPS Investor Needs to Know

Core Insights - The ongoing conflict in the Middle East may significantly impact United Parcel Service (UPS) in 2026, but not necessarily in the expected ways Group 1: Fuel Costs and Surcharges - UPS's fuel costs were $4.3 billion in 2025, representing only 5.3% of total operating expenses of $80.8 billion [2] - The company applies fuel surcharges weekly based on fuel prices, which have recently offset fuel costs, potentially benefiting UPS in a high fuel price environment [4] - In 2024, the change in fuel costs is projected to be a negative $409 million, while fuel surcharges are expected to change positively by $270 million, resulting in a net difference of $139 million [5] Group 2: Third-Party Transportation Costs - UPS purchases transportation from third-party carriers, which accounted for 13.1% of its costs in 2025, and these costs are likely to rise due to increased fuel prices [6] - Disruptions in key transport corridors, such as the Strait of Hormuz, will likely lead to higher purchased transportation expenses for UPS [7] Group 3: Demand Impact - Global trade conflicts and inflation are detrimental to package delivery companies, particularly affecting UPS's small- and medium-sized business customers who are adjusting to tariffs [8]