In a surprising turn of events, UPS has announced it will be laying off 20,000 workers this year, despite reporting higher-than-expected profits for the first quarter. This news comes as the shipping giant prepares for a significant drop in deliveries, largely due to a major reduction in shipments from its biggest customer—Amazon. Earlier this year, UPS revealed plans to cut Amazon’s shipping volume in half by 2026, which triggered a wave of changes in the company’s operations.
UPS’s first quarter earnings report showed a revenue of $21.5 billion, which beat analysts’ expectations by a cool $500 million. However, don’t let those numbers fool you—this isn’t a party. The company is bracing itself for a future where revenue declines, especially with the anticipated slowdown in deliveries. To put the cherry on top, UPS is expecting to save a whopping $3.5 billion by the year 2025 through these job cuts and the closure of 73 leased and owned locations by the end of June. It seems this shipping titan has decided it’s time for a little financial diet.
So, why the sudden shift? Well, it turns out that Amazon, which accounted for nearly 12% of UPS’s revenue in the past year, might not be the golden goose everyone thought it was. In fact, UPS’s CEO, Carol Toé, hinted that while Amazon is their largest customer, it certainly isn’t their most profitable one. She stated that the decision to scale back on shipping Amazon packages could actually open the door for UPS to boost its profit margins. That’s right, folks—a leaner, meaner UPS might just be what the doctor ordered.
Yet, as this shipping giant tries to find its footing amidst changing tides, it has opted to withdraw its full-year guidance for revenue, which had previously been set at $89 billion. The current economic landscape appears rocky and uncertain, forcing UPS to take a step back and reassess its business strategy. Clearly, when life hands you lemons—like a market downturn—it’s time to tighten the belt (and the workforce) a bit.
In a nutshell, the shipping industry is witnessing some significant changes, and UPS is at the forefront. As the company contemplates its future without such heavy reliance on Amazon, workers and analysts alike will be keeping a close eye on how this plays out. Will this gamble pay off, or is it just the storm before a much bigger one? Time will tell, but for now, UPS is taking extreme measures to ensure it can still deliver packages efficiently (even if with fewer hands on deck).
