UPS slashed more jobs than it expected to as part of its ongoing “transformation strategy,” the business revealed during a Tuesday earnings call. Overall, it cut 14,000 positions “primarily in management” and 34,000 operational workforce positions.
That’s more than double its previous estimate of 20,000 reductions, according to CNBC. UPS told the outlet that the 48,000 cuts have already taken place.
“Much of its workforce reductions have been tied to trimming down its work with Amazon, previously its largest customer,” CNBC noted. It added that executives on the earnings call said Amazon’s total volume with UPS declined 21.2% during the third quarter of this year. In the first half of the year, there was a 13% decline.
This February, Supply Chain Digital reported that UPS was “making a bold move to reduce its reliance on Amazon,” by announcing it would cut shipping volumes for the online retail giant by 50%. That change was expected to begin in early 2026.
Carol Tomé, CEO of UPS, explained during a fourth quarter earnings call last year that Amazon was the 118-year-old shipping company’s largest customer but not its most profitable. At that time, around 20% to 25% of UPS’ U.S. network came from Amazon, but only 11.8% of its revenue came from Amazon.
“I want to extend my gratitude to all UPSers for their dedication and steadfast commitment to serving our customers,” said Tomé, according to a Tuesday press release from UPS. “We are executing the most significant strategic shift in our company’s history, and the changes we are implementing are designed to deliver long-term value for all stakeholders. With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year.”
In addition to workforce reductions, UPS also closed daily operations at 93 leased and owned buildings during the first nine months of this year as part of its strategic shift. Per the Tuesday earnings report, UPS had “realized cost savings of approximately $2.2 billion,” as of Sept. 30. By the end of the year, it expects to achieve $3.5 billion total year over year cost savings.
“Our transformation strategy activities have spanned several years and are designed to fundamentally change the spans and layers of our organization structure, processes, technologies and the composition of our business portfolio,” the company said. It noted that “circumstances precipitated these initiatives, including identification and prioritization of certain investments, developments and changes in competitive landscapes, inflationary pressures, consumer behaviors, and other factors including post-COVID normalization and volume diversions attributed to our 2023 labor negotiations.”
Supply Chain Dive reported Tuesday that employee reductions at UPS “include separations stemming from UPS’ voluntary buyout program for full-time drivers.” Citing UPS EVP and CFO Brian Dykes, the outlet said that about 90% of affected drivers exited the company on Aug. 31.
Tomé described the driver buyout program as successful, Supply Chain Dive said. She said the total cost of the buyouts for UPS are $175 million.
Dykes also stressed that UPS and Amazon will retain a partnership even with the decrease in volume. He said the ecommerce giant – which has announced its own intention to reduce its workforce – is still going to be a “large customer” for UPS.
According to the Wall Street Journal, Tomé has been “under pressure to reverse a long slump in the company’s stock price,” particularly from employees and retires who have considerable say in the UPS shareholder structure. CNBC reported Tuesday that the earnings report beat Wall Street estimates and that shares of the company soared with its announcements. In fact, MarketWatch said the company stock spiked “toward its biggest gain in more than three years, as investors cheered an upbeat revenue outlook and aggressive delivery network changes.”
UPS delivers an estimated 22.4 million packages per day, per its website. It prides itself on its on-time delivery rate during the holidays.