Trucking Earnings: Why UPS Is Falling Behind in a Robust Market

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6}#fwtv_IwPANCwOKww. fwtv-panel p{margin:0 0 12px}#fwtv_IwPANCwOKww. fwtv-transcript p{margin:0 0 12px}SummaryView TranscriptWhile the freight market shows resilience, UPS earnings paint a different picture, raising questions about Amazon’s impact and the carrier’s restructuring.

Meanwhile, truck OEMs like PACCAR are reporting strong performance, indicating robust demand and favorable pricing ahead. Christopher Versace breaks down the Q2 earnings season in logistics and transportation.

UPS stock sold off after the parcel giant declined to guide its domestic business meaningfully higher for the second half of the year — a notable omission given resilient consumer demand and robust freight volumes across the broader market.

Chris Frusciante, portfolio manager at TheStreet Pro and chief investment officer at Tematica, said the company’s restrained outlook stands out as a red flag relative to what the rest of the industry is reporting. The Amazon overhang remains the central concern.

Amazon’s earlier announcement that it is moving into business freight and delivery through its Flex service has raised fresh questions about UPS’s long-term volume trajectory. UPS attempted to frame its second-quarter results by arguing that, excluding volumes it intentionally ceded to the market, it actually grew. Frusciante was unimpressed.

“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,” he said. “And I think that’s kind of trying to, as some might say, put lipstick on a pig.” “UPS is not exactly guiding for a much stronger second half of the year compared to the first half.

That’s a little worrisome to me.” — Chris Frusciante, portfolio manager at TheStreet Pro While UPS stumbles through what Frusciante described as a prolonged restructuring — punctuated by divestitures including the sale of brokerage unit Coyote — the broader trucking sector is telling a different story.

Old Dominion reported an operating ratio of 70, and Werner Enterprises CEO Derek Leathers characterized the freight cycle as being in the third inning, citing a tight driver market as a natural cap on capacity growth. PACCAR stood out as the clearest bright spot.

The Kenworth and Peterbilt parent reported 105,000 heavy trucks delivered in the first half of the year and guided for 145,000 in the second half — a roughly 38% sequential increase. Frusciante said filling order slots and incremental pricing power prompted him to raise his price target on PACCAR shares.

“Tight capacity, demand, pricing, better margins, better earnings potentially in the second half of the year,” he said, summarizing the bull case. The 2027 EPA engine mandate is shaping OEM strategy heading into next year.

PACCAR signaled it plans to continue selling current engines through 2026 and gradually phase in compliant 2027 powertrains to avoid a sharp pre-order cliff. Frusciante noted the timing of PACCAR’s annual model reveal — whether early or late in the first quarter — will determine how long 2026 engines remain available.

Rising capital expenditures at carriers including Werner and TFI point to a mix of fleet replacement and pre-buy activity ahead of the mandate. On the carrier side, the tight driver market is constraining capacity expansion and supporting rates.

Veteran drivers at well-run fleets typically receive new equipment first, with one trucking operator on the panel noting a goal of keeping average fleet age below two years. That discipline, combined with incremental demand, is expected to support margin improvement across the sector in the back half of 2025.

UPS declined to guide domestic volumes meaningfully higher for H2, unsettling Wall Street despite resilient consumer freight demand and Amazon competitive pressure. PACCAR guided for 145,000 heavy truck deliveries in H2, up from 105,000 in H1, prompting Frusciante to raise his price target on the stock.

The 2027 EPA engine mandate is driving a pre-buy cycle; PACCAR plans to smooth production by gradually phasing in compliant engines rather than abruptly cutting off 2026 models. Speaker 1 [0:00] Welcome back to FreightWav