Create a discount rule to discount the UPS shipping quote amount:
On the discounts tab, create a new rule, set the trigger to:
If Session Variable "couponcode" exists
AND
Based on Session Variable value:
If the session variable "couponcode" has a value of "SHIP123"
For the calculation, use Based on UPS Shipping rate value.
You wont be able to verify the shipping discount is working on the cart view page, only on the Confirm page.