In a move that will reshape its workforce, United Parcel Service (UPS) has announced plans to lay off 20,000 workers and close 73 facilities. This decision follows a significant shift in its relationship with Amazon, which has been one of its largest clients.
As UPS navigates through cost-cutting measures, the company is adjusting its operations to maintain profitability amid reduced business from the e-commerce giant and ongoing economic challenges.
The job cuts, which represent about 4% of UPS’s total workforce, come as part of a broader effort to streamline operations and reduce costs. While the decision is linked to a decrease in shipping volumes from Amazon, it also reflects the company’s strategy to adapt to evolving market conditions.
UPS’s chief executive, Carol Tomé, emphasised that the changes would help the company become “more nimble” moving forward.
A Shift in UPS-Amazon Partnership
UPS has been in a long-standing partnership with Amazon, but the two companies have recently taken steps to scale down this collaboration. According to UPS, it will reduce its delivery volume from Amazon by over 50% by 2026.
This change is part of UPS’s “glide down” strategy, which aims to optimise its business model by focusing on more profitable clients and reducing dependence on Amazon.
Despite this reduction in business, Amazon has responded positively, with a spokesperson stating that the company respects UPS’s decision and continues to value its long-term working relationship.
Reconfiguration of Operations Amid Economic Uncertainty
Beyond the changes with Amazon, UPS’s decision to lay off workers and close facilities is also driven by broader economic factors. The company’s move is part of a larger network reconfiguration aimed at reducing overheads and improving efficiency.
With rising costs, especially linked to trade tariffs and a shifting global economic landscape, UPS has identified the need to reduce its footprint to stay competitive.
This reorganisation includes enhancing automation across its facilities, which will help lessen the company’s reliance on manual labour.
By the end of June, 73 UPS facilities are expected to close, with the possibility of further closures. The company anticipates saving $3.5 billion this year as part of this restructuring, which is crucial in maintaining its financial health in an uncertain macroeconomic environment.
As the world’s largest package delivery company, UPS’s actions provide insight into broader trends in the logistics and shipping industries. The company’s efforts to reduce costs and optimise its operations underscore the pressures many global firms are facing as they navigate the complexities of international trade and shifting customer relationships.
