United Parcel Service (NYSE: UPS) plans to eliminate 20,000 positions this year and close 73 facilities as it dramatically scales back operations following a significant reduction in shipments from its largest customer, Amazon.com Inc (NASDAQ: AMZN).
The job cuts, representing about 4% of UPS’s global workforce of nearly 490,000 employees, come as part of the company’s broader strategic shift away from low-margin e-commerce deliveries, according to a company statement released Tuesday alongside first-quarter results.
“In connection with expected lower volumes from our largest customer, the company began a network reconfiguration to align our organizational processes of our facilities and workforce,” UPS said in its quarterly report.
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The Atlanta-based courier’s announcement follows its January decision to “glide down” business with Amazon by more than half over 18 months. CEO Carol Tomé told investors on Tuesday’s earnings call that most of the Amazon business being eliminated is “not profitable for us, nor a healthy fit for our network.”
The package volume from Amazon was already down 16% in the first quarter, a steeper decline than UPS had anticipated. The company expects $3.5 billion in total cost savings this year from the network reconfiguration.
“With this reconfiguration, we will also lessen our dependency on labor,” Tomé noted during the call.
The company’s pivot comes amid broader economic challenges, including the impact of President Donald Trump’s tariffs on imports. UPS declined to provide updated 2025 financial guidance, citing “uncertainty in the current macroeconomic environment.”
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Despite these headwinds, UPS reported adjusted first-quarter earnings of $1.49 per share, exceeding analysts’ expectations of $1.40. Revenue narrowly beat forecasts, though the company warned of potential revenue decline in the second quarter compared to a year ago.
The Teamsters union, which represents more than 300,000 UPS hourly workers, has vowed to fight any layoffs affecting its members.
“If UPS wants to continue to downsize corporate management, the Teamsters won’t stand in its way,” said union president Sean O’Brien. “But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight.”
UPS spokesperson Glenn Zaccara responded that the company intends to honor all terms of its contract with the union.
The company’s strategic realignment includes expanding its higher-margin healthcare logistics business. Last week, UPS agreed to acquire Canada-based Andlauer Healthcare Group Inc. for $1.6 billion as part of its goal to reach $20 billion in healthcare revenue by 2026.
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