After "breaking up" with Amazon, UPS cuts 20,000 jobs and suspends full-year forecast amid economic gloom
UPS currently has approximately 490,000 employees and plans to cut 4% of its total workforce due to parting ways with its largest customer, Amazon. This layoff aims at network restructuring and efficiency improvement. Although UPS's first-quarter performance exceeded expectations, it did not update its full-year outlook due to economic uncertainty, and it expects a decline in shipping volume and revenue in the second quarter
After parting ways with its largest customer, Amazon, UPS is cutting 20,000 operational positions to reduce costs.
On Tuesday local time, media reported that UPS (United Parcel Service) announced this week it will cut about 20,000 operational jobs by 2025 and plans to close 73 leased and owned facilities by the end of June this year, referring to this move as a "network restructuring and efficiency enhancement plan." UPS currently has about 490,000 employees, and this layoff plan accounts for approximately 4% of its total workforce. UPS stated in a press release:
In light of our expected decrease in order volume from our largest customer, Amazon, we have begun network restructuring, which is an expansion of the 'Future Network' plan that will integrate our facilities and workforce, as well as redesign end-to-end processes.
Reports indicate that in recent years, UPS has been working to reduce its business dealings with Amazon, partly due to the low profit margins of this business, which erode its profitability. In January of this year, UPS reached a preliminary agreement with Amazon to cut its shipping volume by more than 50% by June 2026, with Amazon previously accounting for about 12% of UPS's revenue. During U.S. trading hours on Tuesday, UPS fell 0.17% in after-hours trading.
This round of layoffs follows an earlier reduction of 12,000 management positions earlier this year, and UPS CEO Carol Tomé stated that the company will reduce its reliance on labor:
Given the uncertainty of the macroeconomic environment, UPS's efforts to restructure its network and reduce costs are timely. Tariffs are a significant uncertainty.
Shadows of Trade War and Financial Performance
Reports analyze that Trump's tariff barriers have led to a sudden drop in shipments from Asia, which has had a ripple effect on the U.S. warehouse and trucking network, significantly reducing UPS's shipping volume in the coming weeks and months.
Data shows that the number of containers entering the Port of Los Angeles (a major gateway for U.S.-Asia trade) has sharply declined, and the situation is expected to worsen until mid-May.
Despite the challenges, UPS's financial performance in the first quarter exceeded Wall Street expectations, reporting a net income of $1.19 billion and revenue of $21.5 billion. Goldman Sachs analyst Jordan Alliger described this performance as "far exceeding expectations." However, UPS declined to update its full-year outlook due to economic uncertainty, only stating that shipping volume and revenue for domestic and international business in the second quarter are expected to decline.
