UPS to Cut 20,000 Jobs Amidst E-Commerce Shift: What You Need to Know

Major Job Cuts at UPS

United Parcel Service Inc. (UPS) is planning to cut 20,000 jobs this year as part of a significant overhaul of its operations. This move is largely attributed to lower shipment volumes from its largest customer, Amazon.com Inc.

Photo by David Paul Morris / Bloomberg

Facility Closures

UPS will be shutting down 73 leased and owned facilities by the end of June, with the potential for more closures to follow. This decision is part of a broader strategy to enhance profitability and streamline operations.

Financial Implications

In January, UPS announced plans to reduce the number of low-margin Amazon parcels it delivers by more than half over an 18-month period. This network reconfiguration is expected to yield $3.5 billion in cost savings this year. Despite these cuts, UPS reported adjusted earnings of US$1.49 a share for the first quarter, surpassing analyst estimates.

Industry Challenges

The company is facing challenges due to a decline in volumes following a pandemic-driven surge in e-commerce. Additionally, UPS is navigating new complexities brought on by President Donald Trump's tariffs, which have affected cross-border shipments and added volatility to the global market.

Strategic Direction

UPS is shifting its focus towards more profitable business lines, including health-care logistics. Recently, the company announced its acquisition of Andlauer Healthcare Group Inc. for $1.6 billion, aiming to generate US$20 billion in health-care revenue by 2026.

Market Reactions

Despite the job cuts, UPS shares saw a rise of 2.2% in pre-market trading, although the stock has dropped 23% this year. The company has opted not to update its 2025 financial outlook, reflecting the prevailing uncertainty in the economy.

With UPS's restructuring efforts, the company aims to emerge as a specialized logistics provider capable of handling higher-yield shipments, enhancing its market position against competitors like FedEx Corp..