UPS to Cut 20,000 Jobs, Close 70 Facilities

UPS to Cut 20,000 Jobs, Close 70 Facilities \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ UPS plans to eliminate 20,000 jobs and close 73 facilities in 2024, largely due to reduced shipping volumes from Amazon. The logistics giant recently renegotiated its decades-long contract with Amazon, cutting package volume by over 50% by 2026. UPS still posted solid Q1 earnings, exceeding analyst expectations.

Quick Looks

• UPS will cut around 20,000 jobs this year, citing restructuring needs.
• 73 UPS buildings will be closed by the end of June, more closures possible.
• Amazon shipment volume will be slashed by 50% under a new agreement by 2026.
• CEO Carol Tomé says the move improves flexibility in a volatile economy.
• Amazon is UPS’s largest but least profitable customer.
• UPS Q1 revenue beat estimates, hitting $21.55 billion.
• No changes to 2024 guidance due to economic uncertainty.

Deep Look

United Parcel Service Inc. (UPS) announced major operational cuts on Tuesday, unveiling plans to lay off around 20,000 employees and shutter at least 73 facilities by the end of June 2024. The sweeping reduction is part of the company’s broader effort to streamline operations following a significant restructuring of its shipping agreement with Amazon — long its largest customer, but also its least profitable.

The company, headquartered in Atlanta, revealed that it is still reviewing its delivery network and may identify additional sites for closure beyond the initial 73 buildings, which include both leased and owned facilities.

“The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier,” UPS CEO Carol Tomé said in a company statement Tuesday. “The macro environment may be uncertain, but with our actions, we will emerge as an even stronger, more nimble UPS.”

This cost-cutting initiative marks one of the most aggressive restructuring efforts by the company in recent memory, as it adapts to a sharp decline in Amazon shipping volumes.

Amazon: From Partner to Volume Cut

In January 2024, UPS and Amazon reached a new agreement to reduce the shipping volume between the two companies by more than 50% by the second half of 2026. The shift ends a nearly 30-year shipping partnership on its original terms and signals a fundamental change in how UPS allocates its resources.

During UPS’s fourth-quarter earnings call in January, Tomé explained the strategic rationale behind the move. “Amazon is our largest customer but it’s not our most profitable customer,” she said. “Its margin is very dilutive to the U.S. domestic business.”

Tomé said that UPS evaluated multiple alternatives and ultimately decided that shrinking the Amazon business was the best long-term path, allowing UPS to focus on higher-margin clients and more predictable delivery contracts.

Workforce and Facility Impact

UPS, which employs roughly 490,000 workers globally, did not provide a breakdown of where the 20,000 job cuts would occur. However, the cuts are expected to impact both union and non-union employees, as well as positions across various levels of the company’s logistics operations.

The closure of 73 buildings, which include sorting centers and smaller fulfillment hubs, reflects UPS’s shift toward a more centralized and cost-efficient delivery model. This is designed to offset declining volumes in certain areas, especially from e-commerce heavyweights like Amazon.

Despite the operational contraction, UPS is not in financial distress. The company continues to be profitable and sees the restructuring as a preemptive, strategic adjustment rather than a reactionary crisis move.

Strong Q1 Performance

In its first-quarter earnings report, UPS reported net income of $1.19 billion, or $1.40 per share, for the quarter ending March 31. After excluding one-time items, adjusted earnings stood at $1.49 per share, exceeding analyst expectations of $1.44 per share, according to Zacks Investment Research.

Revenue came in at $21.55 billion, also beating Wall Street projections, which hovered around $21.06 billion.

Despite these solid figures, UPS is treading cautiously. The company declined to update its full-year outlook, citing ongoing macroeconomic uncertainty, including global shipping demand, inflationary pressures, and geopolitical instability.

UPS previously said it expects to generate about $89 billion in revenue by the end of 2025, a goal it has not yet revised.

Market Response and Future Outlook

Shares of UPS rose slightly in morning trading following the announcement — a signal that investors are confident in the company’s ability to proactively manage cost and remain profitable even as it reduces its dependency on high-volume, low-margin shipping contracts like Amazon’s.

While the job and facility cuts may sting in the short term, especially in communities reliant on UPS employment, the company appears to be steering toward a leaner, more profitable future. Its evolving focus includes strengthening relationships with more lucrative clients, investing in automation, and optimizing delivery routes for maximum cost-efficiency.

UPS’s restructuring also reflects a larger trend within the logistics industry: a shift away from low-margin mass delivery models in favor of quality partnerships and tech-driven efficiency. With competition heating up from rivals like FedEx, DHL, and Amazon’s own in-house delivery network, UPS is betting that agility — not just scale — will define the next phase of logistics leadership.

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