UPS declined to guide domestic parcel volumes meaningfully higher for H2 2025, unsettling investors despite resilient consumer demand and robust freight volumes. In contrast, PACCAR projected 145,000 heavy-truck deliveries in H2 — up from 105,000 in H1 — a 38% sequential increase. The 2027 EPA engine mandate is driving pre-buy activity, with PACCAR planning a phased transition to compliant powertrains. Carrier margins are supported by a tight driver market and disciplined fleet management, as Old Dominion posted a 70 operating ratio and Werner’s CEO described the freight cycle as being in its 'third inning.'
According to FreightWaves, UPS declined to provide meaningful upward guidance for its domestic parcel volumes in the second half of 2025 — a notable omission amid resilient consumer demand and robust freight volumes across the broader U.S. transportation sector.
UPS earnings disappoint amid Amazon pressure
UPS’s second-quarter financial results triggered a stock sell-off, driven primarily by its refusal to raise full-year domestic volume expectations despite strong macro-level indicators. Chris Frusciante, portfolio manager at TheStreet Pro and chief investment officer at Tematica, called the restrained outlook a red flag relative to peers. He emphasized that UPS’s narrative — which attempted to frame growth by excluding volumes it “intentionally ceded” — failed to offset underlying weakness:
“If UPS is saying, oh, on an adjusted basis, if we strip this out, strip that out, you know, oh, we would have done this, that’s not really what happened. And I think that’s kind of trying to, as some might say, put lipstick on a pig.” — Chris Frusciante, portfolio manager at TheStreet Pro
Frusciante underscored that UPS is not guiding for a materially stronger second half compared to the first half — a concerning signal given the lead-up to the holiday shopping season and sustained consumer freight demand. The Amazon Flex expansion into business freight and delivery continues to weigh heavily on investor sentiment, raising structural questions about UPS’s long-term volume trajectory.
PACCAR surges with 145,000 H2 heavy-truck delivery target
In stark contrast to UPS’s uncertainty, PACCAR — parent company of Kenworth and Peterbilt — reported exceptional performance. The OEM delivered 105,000 heavy trucks in the first half of 2025 and guided for 145,000 units in the second half — a sequential increase of roughly 38%. This forecast reflects tight capacity, strong order backlogs, and pricing power, prompting Frusciante to raise his price target on PACCAR shares.
The 2027 EPA engine mandate is accelerating pre-buy activity across the carrier industry. PACCAR plans to continue selling current-generation engines through 2026 and phase in compliant powertrains gradually — avoiding a sharp pre-order cliff. Timing of its annual model reveal, whether early or late in Q1 2026, will determine how long 2026-model engines remain available.
Tight driver market supports carrier margins
Carrier-side fundamentals remain strong. Old Dominion reported an operating ratio of 70, while Derek Leathers, CEO of Werner Enterprises, characterized the freight cycle as being in the “third inning,” citing a persistently tight driver market as a natural cap on capacity growth. Rising capital expenditures at carriers including Werner and TFI International reflect both fleet replacement cycles and pre-buy activity ahead of the EPA mandate.
Disciplined fleet management is also contributing to margin resilience: one operator noted a goal of keeping average fleet age below two years, prioritizing new equipment for veteran drivers at well-run fleets. Combined with incremental demand, this discipline is expected to support margin improvement across the trucking sector in the back half of 2025.
Meanwhile, UPS’s ongoing restructuring — punctuated by divestitures including the sale of brokerage unit Coyote — has yet to yield clear operational momentum. Its inability to align guidance with broader market strength underscores divergent trajectories within the logistics ecosystem: while parcel giants face mounting competitive headwinds, truck OEMs and asset-light carriers benefit from structural supply constraints and regulatory tailwinds.
Source: FreightWaves
Compiled from international media by the SCI.AI editorial team.
