UPS Announces Major Job Cuts Amid Financial Restructuring
This year, United Parcel Service (UPS) has eliminated 48,000 jobs, marking one of the largest layoffs by a U.S. company since the pandemic began. The company is undergoing significant changes to manage costs and boost its struggling stock price.
On Tuesday, the Atlanta-based logistics giant revealed these cuts, coinciding with a third-quarter profit that exceeded analysts’ expectations.
Of the job reductions, 34,000 were in driving and warehouse operations, while 14,000 were aimed at business owners. It’s a major move for a company that employed approximately 500,000 at the start of the year.
CEO Carol Tomé stated that these cuts, which include both layoffs and acquisitions, are part of a broader restructuring strategy designed to maximize efficiency within UPS.
“We’re in the midst of the most significant strategic transformation in our company’s history,” Tomé mentioned, emphasizing that these changes should create long-term value for stakeholders.
Despite generally lower sales and profits, UPS’s stock rose nearly 9% during Tuesday’s trading, indicating some investor optimism.
The company reported third-quarter revenue of $1.3 billion, down from $1.5 billion a year earlier, while total sales decreased by 3.7% to $21.4 billion.
Tomé, who is the first external CEO in UPS’s history, is facing mounting pressure from both investors and employees frustrated by its performance in comparison to competitors like FedEx and the rising Amazon logistics segment.
UPS’s stock has plummeted over 25% since the beginning of 2023, part of the backdrop to these significant job cuts, which were larger than initially expected. Earlier this year, UPS had announced plans to eliminate about 20,000 jobs and had already cut 12,000 executive roles last year.
On a call with analysts, Tomé reiterated the company’s commitment to cost reduction, noting that the restructuring has already yielded $2.2 billion in savings through various measures, including automation and facility closures. This holiday season, UPS plans to adjust its operations with fewer leased aircraft and vehicles, as well as a reduced number of seasonal workers.
So far, the company has shut down 93 buildings this year, with more closures anticipated through 2025.
Part of the efficiency push also involves reducing reliance on Amazon, a client from whom package volumes dropped over 21% in the last quarter due to UPS strategically moving away from lower-margin operations. Tomé expects this trend to persist moving forward.
The company is also experiencing challenges due to geopolitical factors, particularly a nearly 30% drop in package volumes from China to the United States caused by new tariffs.
Looking ahead, UPS forecasts flat sales for the next year at around $89 billion and aims to continue reducing its operational footprint.
The recent cuts are part of a broader trend of downsizing in the logistics and technology sectors, as reflected in significant layoffs from both Amazon and FedEx. UPS’s latest job cuts are its largest ever in a 117-year history.
