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UPS has announced plans to cut up to 30,000 operational jobs this year as part of its ongoing turnaround strategy, which includes reducing its reliance on Amazon shipments and focusing on more profitable business segments.
During Tuesday’s conference call, Chief Financial Officer Brian Dykes revealed that the job reductions would be implemented through a combination of voluntary buyout offers for full-time drivers and natural attrition. The company is also planning to shutter 24 buildings in the first half of 2023, with additional closures under evaluation for later in the year.
“This is a tactical move,” Dykes told analysts. “We did something similar last year in order to help us to right-size the position levels and the network infrastructure with the new volume and delivery levels.”
This latest round of cuts continues UPS’s significant workforce restructuring efforts. In a regulatory filing from October, the company disclosed it had already eliminated approximately 34,000 operational positions and ceased daily operations at 93 facilities during the first nine months of last year. An additional 14,000 positions, primarily in management, were also eliminated during that period.
The shipping giant, which employs approximately 490,000 workers according to FactSet data, appears to be accelerating its restructuring plans. In April, UPS announced intentions to eliminate about 20,000 jobs and close more than 70 facilities as it dramatically scales back its handling of Amazon shipments.
CEO Carol Tome confirmed during the conference call that UPS had already reduced Amazon’s volume in its network by approximately 1 million packages per day by the end of 2025. This aligns with the company’s January 2025 announcement that it had reached an agreement with Amazon to reduce volume by more than 50% by the second half of 2026.
“We’re in the final six months of our Amazon accelerated glide down plan, and for the full year, 2026, we intend to glide down another million pieces per day, while continuing to reconfigure our network,” Tome explained.
The strategic shift away from Amazon represents a significant pivot for UPS. The e-commerce giant has been UPS’s largest customer, but the carrier is now prioritizing higher-margin business segments, particularly in the healthcare sector. This move reflects broader industry trends where logistics companies are seeking more diversified and profitable customer bases rather than relying heavily on high-volume, lower-margin e-commerce deliveries.
In another significant operational announcement, UPS confirmed it is officially retiring its fleet of McDonnell Douglas MD-11 cargo planes following a deadly crash in Louisville, Kentucky in November. These aircraft, which represented approximately 9% of the UPS fleet, had been grounded since the incident.
The retirement of the MD-11 fleet could potentially impact UPS’s air cargo capacity in the short term, though the company has not detailed any specific plans for fleet replacement or how it will manage the reduction in air transport capability.
Despite the sweeping changes and restructuring efforts, investors appeared to respond positively to the company’s strategic direction. Shares of United Parcel Service Inc. rose 3.4% in afternoon trading following the announcements.
The extensive workforce reductions and facility closures underscore the significant transformation underway at UPS as it adapts to changing market dynamics, seeks improved profitability, and positions itself for more sustainable growth in an increasingly competitive logistics landscape.
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8 Comments
This is a tough but necessary move by UPS to right-size their operations and focus on more profitable business segments. Cutting up to 30,000 jobs is a significant restructuring, but it should help improve their efficiency and competitiveness long-term.
You’re right, the job cuts are a strategic decision to adapt to changing market conditions. It will be interesting to see how UPS’s network optimization efforts play out over the next year or so.
This is an interesting development in the parcel delivery space. I wonder how UPS’s competitors like FedEx and the USPS will respond to these changes. It could lead to a broader industry shakeup.
Good point. The parcel delivery market is highly competitive, so UPS’s moves could put pressure on other players to reevaluate their own strategies and cost structures.
While the job cuts are significant, it’s good to see UPS taking steps to improve their financial performance and operational efficiency. Adapting to changing market dynamics is crucial for long-term success in this industry.
I’m curious to see how UPS’s shift away from Amazon shipments and focus on more profitable segments will impact their overall business. This kind of operational restructuring can be challenging but may pay off if executed well.
Agreed, reducing reliance on Amazon is a smart move. UPS needs to diversify its customer base and revenue streams to improve profitability long-term.
The job cuts and facility closures seem like a proactive approach by UPS to streamline their operations. It will be important for them to carefully manage this transition to avoid any major service disruptions for their customers.