UPS is cutting 20,000 jobs this year, or 4 percent of its total workforce, as the package delivery giant powers through its decoupling with Amazon.
The courier’s layoffs are a side effect of the company’s Network of the Future plan, which is intended to make UPS more reliant on automated processes within warehouses and consolidate sorting facilities. Along with the 20,000 job closures, 73 leased and owned buildings will be shuttered by June. The company anticipates $3.5 billion of total cost savings through these measures.
More from Sourcing Journal
During a Tuesday earnings call, Brian Dykes, chief financial officer at UPS, said the reconfiguration is aligned with the anticipated Amazon volume reduction across 2025.
UPS had already expected to cut volume it moves for Amazon by 50 percent by the 2026 second half. In the first quarter, Amazon average daily volume (ADV) decreased 16 percent year over year, “which was more than we originally planned,” according to Dykes. Second quarter ADV is projected to have the same decline.
The back half of 2025 should see steeper declines of roughly 30 percent in each quarter.
Amazon accounted for 11.8 percent of UPS revenue in 2024, but the latter has looked to wean off the e-commerce giant as the partnership has weighed on profit margins.
For the first quarter, UPS generated $21.5 billion in revenue, a 0.7 percent decrease from the year-ago period and had a net income of $1.2 billion, up 7 percent from $1.1 billion in the year prior.
Domestic daily volume slipped 3.5 percent to 17.4 million packages, dragging down the overall worldwide package volume to a 1.9 percent dip to 20.8 million parcels.
“While volume and revenue performance in the quarter were in line with our expectations, our monthly performance was not,” said Dykes. “In U.S. domestic, following a strong January relative to our expectations, uncertainty in the market began impacting consumer behavior. Demand shifted down in February, falling further than our expectations and normal shipping patterns and remained at that level in March.”
Like many public companies navigating the current geopolitical environment, UPS is not providing a full-year guidance.
During the call, UPS said the business is expected to generate $21 billion in revenue and in operating margin of about 9.3 percent in the second quarter. That would be a 3.7 percent decline from the $21.8 billion brought in during the year prior, but above last year’s 8.9 percent margin.
Story Continues
However, the uncertainty related to the tariffs levied by the Trump administration is expected to bring ADVs down 9 percent in the U.S. domestic business, with domestic revenue anticipated to dip in the low-single digits. SMBs will be “disproportionally impacted,” Dykes said.
“Many of our SMBs as we talk to them are 100-percent single sourced from China,” said CEO Carol Tomé in the call, citing the 145-percent tariff on Chinese imports and the elimination of the de minimis exemption. “Our SMBs who don’t have the working capital capabilities to pull forward inventory are saying, ‘how are we going to handle this cost increase that’s coming our way?’”
Tomé noted that these businesses are seeking alternate forms of supply, and working with original equipment manufacturers trying to move to other countries. However, she acknowledged “the large companies get to take the first phone call.”
While UPS exposure to China is roughly 400,000 imported packages per day, or less than 2 percent of total global ADV, revenue on the China-to-U.S. trade lane was 11 percent of total international revenue.
“Our China to U.S. trade lanes are our most profitable trade lanes,” said Tomé, who noted that the courier has had ongoing discussions with its top 100 customers to understand the impacts of Trump’s trade policy. “These customers have told us that they are exploring various options to address the tariff from absorbing the cost to pushing them into retail prices to asking suppliers to help defray the expense.”
On the call, Dykes also said UPS is evaluating approximately 50 more warehouses to close as it continues its network consolidation. Sixty-four percent of UPS volume now goes through an automated hub—up 4.5 percentage points from the year prior, according to Dykes.
The earnings report came a day after Bloomberg said UPS was in talks to partner with robotics startup Figure AI to use humanoid robots within its warehousing network, which would further the focus on automation and put more jobs in doubt.
“There’s much more to automation than just automating the sort,” said Tomé, who didn’t confirm the partnership. “We’re also looking at the use of robotics for automatic label application and many other automatic opportunities like unloading and loading trailers.”
Nando Cesarone, president U.S. at UPS, reiterated that the end goal is to have 400 fully or semi-automated warehouses, with 200 facilities expected to be shuttered by 2028.
“We’re working ahead of ourselves as new automation technology—the application of AI in certain areas to help us with labor—is introduced into these operations, and that allows us to really take cost out of the network,” Cesarone said. “The end result will be a much more efficient operation with less dependency on labor.”
As of the company’s annual report released in March, UPS had 490,000 total employees, excluding temporary seasonal employees. More than 75 percent of the 406,000 U.S. employees are unionized, represented by either the Teamsters or the Independent Pilots Association.
Stock price has been largely unaffected by the layoffs, inching down 0.4 percent by noon Tuesday.
IvelinRadkov/iStock via Getty ImagesAvidity Biosciences (NASDAQ:RNA) has announced new data from its clinical trials evaluating the experimental treatment del-zota for...
