5 Things Every UPS Investor Should Know

With all eyes on the ongoing war in the Middle East, United Parcel Service (NYSE: UPS ) Investors will wonder how the controversy will affect the company in 2026. The answer is that it can have a significant impact, but perhaps not in the way that most investors think. Here are five things investors should consider about UPS.

With oil prices rising due to the conflict, it’s natural that investors may be concerned about UPS’s fuel costs. In reality, UPS is suffering from fuel costs, but perhaps not in the way that many investors think. First, fuel costs of $4.3 billion in 2025 represent only 5.3% of total operating costs of $80.8 billion.

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Second, UPS applies fuel surcharges based on weekly jet, kerosene, and diesel fuel prices. In addition, in recent years, fuel surcharges have exceeded fuel costs. In other words, UPS fuel surcharges don’t just reflect fuel cost changes; They have become net contributors to profit situations.

If this continues in the current environment, then higher fuel prices, all things being equal, could be a net benefit for UPS.

Data source: UPS SEC filings. *Additional expenses of the family unit.

While direct fuel costs are not a major problem, UPS is likely to suffer in the current environment. The company purchases transportation from third-party carriers, which accounted for 13.1% of costs in 2025. Given the long-term increase in fuel costs, these carriers will likely increase their surcharges, leading to a corresponding increase in purchased transportation costs.

Disruption in the Strait of Hormuz and other key Middle East transportation corridors, including the Jebel Ali port in Dubai, will likely increase UPS’s costs, primarily through higher purchased transportation costs.

International trade disputes, especially those that lead to inflation, are not good news for package delivery companies. Of particular note, UPS’s small and medium business customers are already experiencing the impact of tariffs on their businesses as they regulate product sourcing.

In addition, most of them will be reducing their already acquired inventory through 2025, and the last thing they need is more trade barriers in the midst of inflation. As a result, UPS could see some impact on delivery volume in the quarter.

The dispute is very likely to have a negative impact on UPS stock in 2026, but it is difficult to say how long the impact will last. On a positive note, UPS may be able to handle relatively high fuel prices if trade lines reopen and inflationary pressures ease, but the combination of all three problems will hurt its volume and profitability, making it a long-running dispute.

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Lee Samha has no position in the mentioned stocks. The Motley Fool has and offers positions in the United Parcel Service. Motley Fool has a disclosure policy.

5 Things Every UPS Investor Should Know was originally published by The Motley Fool