UPS to Cut 20,000 Jobs Amid Shift Away from Amazon Deliveries

 

UPS to Cut 20,000 Jobs Amid Shift Away from Amazon Deliveries

In a significant step related to its strategic choice to lessen dependency on Amazon, its biggest client, United Parcel Service (UPS) has announced plans to lay off 20,000 workers in 2025. This large staff reduction occurs as the delivery behemoth seeks to increase profitability through facilities consolidation and cost-cutting initiatives.

Workforce Reduction Targets 4% of UPS Employees

Just over 4% of UPS's global workforce, or over 490,000 individuals, would be affected by the job layoffs. This follows the 12,000 job cuts from the previous year. By June 2025, UPS will be closing 73 facilities as part of its restructuring plans, and more closures may be in the works.

During UPS's latest earnings call, CFO Brian Dykes stated, "These actions will enable us to expand our U.S. Domestic operating margin and increase profitability."

According to projections, UPS will save $3.5 billion in 2025 as a result of the layoffs, which is in line with its overarching objective of simplifying operations in the face of declining package volumes from Amazon.

 

 Amazon Shipments to Drop by 50% as UPS Prioritizes Profitability

 

The expected decrease in Amazon parcel volume by UPS is closely linked to the job losses. The business announced that it and Amazon have agreed to reduce delivery volume by more than 50% beginning in the second half of 2026.

A UPS representative told CBS MoneyWatch, "The decision to reduce Amazon shipments was a strategic one to focus on revenue quality and improve domestic operating margins."

It's interesting to note that Amazon claimed that, despite offers to raise shipping volumes, UPS decided to scale back the cooperation because of operational objectives.

According to Amazon representative Kelly Nantel, "UPS requested the reduction in volume, and we respect that decision." "Our working relationship remains strong."

 

Teamsters Warn UPS Not to Cut Union Jobs

A large percentage of UPS employees are represented by the Teamsters union, which reacted swiftly to the news. Teamsters General President Sean M. O'Brien claims that UPS is obligated to create 30,000 union jobs as part of a national master agreement.

"UPS is free to reduce corporate management if that is their desire. However, they would face a fierce battle if they targeted union employment, O'Brien stated.

The union's adamant position highlights the growing conflict between labor agreements and corporate restructuring, particularly as UPS looks to reduce operations without sacrificing worker safeguards.

 

Global Trade Risks Add More Pressure

UPS additionally pointed to increased confusion surrounding rules for global trade, such as U.S. government tariffs, as an issue that could arise in the future. Changes in trade with nations like China might have an effect on the company's revenue, which handles about 400,000 imported goods every day.

During the results call, UPS CEO Carol Tomé stated, "China to U.S. trade lanes are our most profitable and accounted for 11% of our international revenue last year."

UPS has introduced a Global Checkout service that gives international clients clear cost estimates at checkout to assist them in navigating new tariffs and levies.

 

UPS Shares Slip Amid Announcements

UPS saw its shares drop $0.55 (0.6%) to $96.61 in afternoon trade Tuesday, even though the company reported $21.5 billion in revenue for the same period last year. As the business moves through a time that involves significant operational change, investors are worried.

 

Amazon Also Faces Scrutiny Over Tariff Transparency

Meanwhile, a different report that suggests Amazon may reveal tariff charges on product listings has drawn political criticism. Amazon has denied any definitive plans, but the White House accused the store of undertaking a "hostile and political" action.

Speaking about the internal debate on displaying import charges, Amazon spokesperson Tim Doyle stated, "This was never approved and is not going to happen."

The argument demonstrates how UPS and Amazon are both functioning in a world that is becoming more complicated and where operational choices and trade disputes have a significant impact.

Conclusion: A Pivotal Shift in Logistics Strategy

UPS's strategy shift toward profit-driven transportation is seen in its decision to reduce Amazon deliveries and lay off 20,000 employees. The business is streamlining its operations to remain adaptable and successful as the dynamics of global trade change and competition heat up. However, UPS will have to carefully balance cost control with maintaining its ties with its employees and customers in light of union pushback and other trade worries.