United Parcel Service (UPS) announced a major restructuring on Tuesday, revealing plans to cut 20,000 jobs and close 73 facilities. The decision stems from a sharp reduction in deliveries for Amazon.com, its largest customer, and the ongoing impacts of U.S. President Donald Trump’s tariffs.
UPS spokespersons explained that the layoffs are tied to a 50% reduction in shipping volume from Amazon, along with broader cost-cutting measures aimed at improving operational efficiency. The company’s efforts are part of a larger restructuring strategy focused on streamlining operations.
An Amazon spokesperson confirmed the reduction in volume but stated that the decision was made to align with UPS’s operational needs. This change marks a significant shift in the long-standing partnership between the two companies.
Furthermore, the announcement comes amid rising concerns over the global economic slowdown triggered by trade disruptions. CEO Carol Tome acknowledged the far-reaching impact of Trump’s aggressive trade policies, stating, “The world hasn’t faced such enormous potential impacts to trade in more than 100 years.” UPS, being the largest parcel delivery company in the world, is often seen as a bellwether for global economic health.
The company is bracing for financial strain as it works to adjust to the decline in business. UPS aims to cut $3.5 billion in costs by 2025 through these operational changes. The reduction in Amazon’s shipping volume is particularly impactful, as much of it involved low-margin deliveries from fulfillment centers.
For the second quarter, UPS is forecasting a 9.3% operating margin, which falls short of the double-digit margins typically expected by investors. The company predicts a 9% drop in average daily packages and a slight decrease in overall revenue.
As of the latest trading session, UPS shares slipped 0.3%, while its competitor FedEx saw a 1.1% decline.
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