UPS · 10-Q · 2026Q2 · Full report
Operating Expense Trends
UNITED PARCEL SERVICE INC · 2026-08-05 · Importance 54 · Surprise 40 · No source text
Consolidated operating expenses increased 12.9% to $21.904 billion in the second quarter and 6.5% to $41.839 billion in the first half of 2026. Purchased transportation rose $665 million in the quarter and $699 million year to date, driven by higher USPS Ground Saver fees, leased-aircraft and charter costs, and third-party fuel surcharges. Fuel expense increased $639 million in the quarter and $664 million year to date because of higher jet-fuel, diesel and gasoline prices associated with the Middle East conflict. Compensation and benefits increased $864 million in the quarter and $472 million year to date in the U.S. Domestic Package segment, including $1.1 billion of second-quarter Driver Choice separation costs.
Key facts
- We expect non-GAAP adjusted operating expense to exclude between $1.3 and $1.5 billion in cost during full year 2026, primarily related to employee separation costs and third-party consulting fees, of which $1.1 billion is related to the Driver Choice Program. source
- As of June 30, 2026, we had incurred costs to date of $1.8 billion for transformation initiatives, including $1.2 billion in 2026. source
- Operating expenses for the three months ended June 30, 2026 were $21,904 million, up $2,505 million or 12.9% versus $19,399 million in 2025. source
- U.S. Domestic Package operating expenses for the three months ended June 30, 2026 were $14,914 million, up $1,747 million or 13.3% versus $13,167 million in 2025. source
- We recorded approximately $1.1 billion in separation costs related to our previously announced voluntary separation program, the Driver Choice Program. source
- Operating expenses for the six months ended June 30, 2026 were $41,839 million, up $2,560 million or 6.5% versus $39,279 million in 2025. source
- Transformation strategy costs were $891 million, or $1.05 per diluted share, in the second quarter of 2026 and $933 million, or $1.09 per diluted share, year to date. source
- U.S. Domestic Package non-GAAP adjusted operating expenses for the three months ended June 30, 2026 were $13,742 million versus $13,101 million in 2025, an increase of 4.9%. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -11.0% | Operating expenses for the three months ended June 30, 2026 were $21,904 million, up $2,505 million or 12.9% versus $19,399 million in 2025. |
| operating_income | negative | realized | -5.3% | As of June 30, 2026, we had incurred costs to date of $1.8 billion for transformation initiatives, including $1.2 billion in 2026. |
| operating_income | negative | probable | -3.1% | We expect non-GAAP adjusted operating expense to exclude between $1.3 and $1.5 billion in cost during full year 2026, primarily related to… |