UPS Announces Major Workforce Reduction and Strategic Shift
Global package delivery giant UPS has revealed plans to cut up to 30,000 operational jobs this year as part of its ongoing corporate turnaround efforts. This strategic move is aimed at reducing the company's dependency on its largest customer, Amazon, while simultaneously focusing on more profitable business areas such as healthcare logistics.
Voluntary Buyouts and Attrition Drive Job Cuts
During the company's recent conference call, Chief Financial Officer Brian Dykes explained that the workforce reduction will be achieved through a combination of voluntary buyout offers for full-time drivers and natural attrition. Dykes described this as a tactical maneuver similar to actions taken last year, stating, "This is a tactical move. We did something similar last year in order to help us to right-size the position levels and the network infrastructure with the new volume and delivery levels."
Facility Consolidation and Previous Restructuring
The company is also planning to close 24 buildings during the first half of the year and is evaluating additional facility closures for later in 2025. This follows significant restructuring already implemented:
- Approximately 34,000 operational positions eliminated during the first nine months of last year
- Daily operations ceased at 93 leased and owned buildings during the same period
- About 14,000 job cuts announced, primarily within management ranks
According to financial data provider FactSet, UPS currently employs approximately 490,000 workers worldwide.
Strategic Shift Away from Amazon Dependence
The job cuts represent a continuation of UPS's deliberate strategy to reduce its reliance on Amazon shipments. The company announced in April 2025 that it planned to eliminate about 20,000 jobs and close more than 70 facilities as part of this transition.
In January 2025, UPS reached a significant agreement with Amazon to reduce shipment volumes by more than 50% by the second half of 2026. CEO Carol Tomé provided specific progress metrics during the conference call, noting that by the end of 2025, UPS had already reduced Amazon's volume in its network by approximately 1 million pieces per day.
Tomé emphasized the ongoing nature of this transition, stating, "We're in the final six months of our Amazon accelerated glide down plan, and for the full year, 2026, we intend to glide down another million pieces per day, while continuing to reconfigure our network."
Fleet Modernization and Safety Measures
In a related development, UPS announced the official retirement of its McDonnell Douglas MD-11 cargo planes following a deadly crash in Louisville, Kentucky in November. These aircraft, which represented about 9% of the UPS fleet, had been grounded since the incident.
Market Response and Future Outlook
Investors responded positively to the company's strategic announcements, with shares of United Parcel Service Inc. rising 3.4% in afternoon trading following the conference call. The comprehensive restructuring plan reflects UPS's commitment to:
- Reducing operational costs through workforce optimization
- Shifting focus toward higher-margin business segments
- Modernizing infrastructure and fleet capabilities
- Improving overall profitability and shareholder value
The company's multi-year transformation strategy continues to unfold as it navigates changing market dynamics and positions itself for sustainable growth in the evolving logistics landscape.
