UPS plans to fire 20,000 workers amid economic concerns

In response to ongoing economic uncertainties and a significant decrease in shipping volumes, United Parcel Service (UPS) announced plans to cut 20,000 jobs in 2025 as part of a broader strategy to streamline its operations. The decision comes after a notable reduction in deliveries from its largest customer, Amazon, with plans to cut its shipping volume in half by the second half of 2026. This substantial job reduction amounts to about 4% of UPS’s global workforce and reflects the company's efforts to adapt to changing market demands as well as increased automation in its operations. UPS previously reported a slight decline in first-quarter revenue to $21.5 billion, which, however, still surpassed market expectations. While the company aimed for savings of approximately $3.5 billion by 2025 through these restructuring measures, it is also closing 73 of its facilities. This operational downsizing is intended to reposition UPS in light of a contracting market, driven largely by reduced shipping needs stemming from tariffs enacted by the U.S. government and shifts in consumer behavior. The pandemic-induced economic conditions have exacerbated these challenges, leading to a reassessment of UPS's long-standing contract with Amazon, which was previously a steady source of revenue. During this period, UPS acknowledged that a significant portion of its business from Amazon proved not to be profitable. The shift away from Amazon's service, which constituted 11.8% of UPS's overall revenue in 2024, is part of a strategic realignment that aims to focus on more lucrative operations. In light of these factors, UPS's management, led by CEO Carol Tome, expressed the need to reconfigure the company’s operational infrastructure proactively. The growing use of technology within its distribution network is anticipated to decrease UPS's reliance on manual labor. As they face these transitions, UPS leaders indicated optimism that their restructuring will create a more agile and resilient company moving forward, despite the current economic climate and uncertainties. This situation showcases the challenges that traditional logistics companies face in adapting to an evolving marketplace influenced by various factors, including tariffs and economic contractions.