UPS (UPS, Financial) is set to reduce its workforce by approximately 4%, equating to around 20,000 operational positions, as it navigates a split from its largest client, Amazon. This decision is part of a strategic move towards network restructuring and efficiency improvement. Despite UPS's stronger-than-expected first-quarter performance, the company has not updated its annual outlook due to economic uncertainties, anticipating a decline in shipping volume and revenue in the second quarter.
The restructuring involves closing 73 facilities by the end of June 2025. The split from Amazon, which previously accounted for about 12% of UPS's revenue, is expected to significantly reduce order volumes, prompting these changes. Earlier in the year, UPS had already cut 12,000 management positions. CEO Carol Tomé emphasized the need to reduce reliance on labor due to macroeconomic uncertainties.
Trade tensions, particularly tariffs introduced during the Trump administration, have led to a decrease in shipments from Asia, impacting UPS's logistics network. Despite these challenges, UPS reported a net income of $1.19 billion and revenue of $21.5 billion in the first quarter, surpassing Wall Street expectations. However, the company remains cautious about future projections.
