UPS Layoffs
The massive logistics company UPS, located in Atlanta, revealed on Tuesday that it has laid off 48,000 employees since last year as part of a comprehensive reorganization intended to boost profitability and win back investor trust.
After laying off 14,000 managerial positions in 2024, the corporation, which had about 500,000 employees at the beginning of 2024, said that it was cutting 34,000 driver and warehouse positions this year.
UPS shares were up more than 7% in afternoon trading as a result of the announcement, which came as the company’s third-quarter results were stronger than anticipated. According to UPS CEO Carol Tomé, “We are executing the most significant strategic shift in our company’s history.” The changes are intended to provide “long-term value for all stakeholders.”
What caused the drastic cuts?
Since UPS’s stock has underperformed the overall market, investors have put pressure on the company. As part of a massive efficiency revamp, the corporation is cutting back on underperforming areas, including its shipping collaboration with Amazon.
While U.S. revenue per package increased by 10% in Q3, Amazon’s deliveries decreased by 21% year over year as the company concentrated on higher-margin operations.
Financial performance
Despite the reductions, revenue dropped to $21.4 billion from $22.2 billion in the third quarter, while net income dropped to $1.3 billion from $1.5 billion in the same period last year.
Nevertheless, the market responded favorably to adjusted earnings per share of $1.74, which above analyst projections.
Despite Tuesday’s rebound, UPS shares are still down around 25% year-to-date, while the S&P 500 has increased by 17%.
Trade obstacles and tariffs
New tariffs imposed earlier this year by President Trump’s administration have hurt UPS’s global operations. Following the May elimination of the “de minimis” loophole, which had previously permitted duty-free imports under $800, parcel volumes from China to the United States fell by almost 30% in Q3.
Labour’s resistance
Many UPS employees are represented by the Teamsters union, which has threatened to oppose layoffs that violate labor agreements. UPS “was acting within the terms of our contract,” according to Tomé, who upheld the company’s compliance.
What is to come
As UPS adjusts to slower e-commerce growth and changing global trade patterns, analysts believe the company’s revival will depend on striking a balance between cost control and service reliability.
The action is a turning point for UPS and its employees as it represents the company’s biggest reorganization in its 117-year history.
