United Parcel Service on Tuesday announced plans to eliminate up to
30,000 jobs and shut down 24 facilities in 2026, as the world’s largest package
delivery company accelerates a strategic shift away from low-margin volumes
tied to UPS Amazon delivery reduction, focusing instead on more profitable
business segments.
Shares of United Parcel Service rose about 4% in midday trading after
the company reported fourth-quarter results that beat Wall Street expectations
and issued a stronger-than-expected revenue forecast for 2026. Rival FedEx also
gained 2.6%, reflecting broader investor optimism in the parcel delivery
sector.
UPS Amazon delivery reduction reported consolidated fourth-quarter revenue of $24.5 billion,
exceeding analysts’ estimates of $24 billion. On an adjusted basis, the company
posted earnings of $2.38 per share for the quarter ended December 31, well
above the consensus estimate of $2.20 per share.
The job cuts are closely related to UPS's plan to cut back on deliveries
to Amazon. According to CEO Carol Tomé, the company is in the last stage of its
quick effort to cut down on the number of packages it sends to Amazon, which is
its biggest customer and a delivery competitor that is getting stronger.
Tomé said on a conference call with analysts, "We're in the last
six months of our Amazon accelerated glide-down plan." "We plan to
glide down another million pieces per day for the whole year 2026 while we keep
changing our network."
Last January, UPS said it would speed up plans to cut millions of
low-profit Amazon deliveries. The company called the business
"extraordinarily dilutive" to margins. The UPS plan to cut back on
Amazon deliveries is part of a larger shift toward serving higher-yield
customers and offering premium logistics services.
As Amazon's business slowed down, UPS cut 48,000 jobs in 2025. It also
offered drivers buyouts and closed 93 facilities. The new cuts for 2026 will
mostly happen through attrition and another offer for full-time drivers to buy
out their contracts.
Brian Dykes, the Chief Financial Officer, said that layoffs are not
planned. He said that "a lot of the cuts will come from not filling
positions when part-time workers leave." He also said that UPS has a lot
of unionized workers.
According to its 2024 annual report, UPS had about 490,000 employees
around the world, with almost 78,000 of them in management positions. We
couldn't get the most recent job numbers for 2025 right away.
The company will close 24 facilities in 2026 as part of its broader
network reconfiguration tied to the UPS Amazon delivery reduction. Executives
said these moves are necessary to align infrastructure with changing volume
patterns and to improve long-term efficiency.
UPS and rivals like FedEx have been grappling with persistently soft
demand for delivery services, driven by slower e-commerce growth and shifting
consumer behavior after the pandemic boom.
According to LSEG data, UPS expects to make $89.7 billion in 2026, up
from $88.7 billion in 2025 and more than analysts had expected, which was
almost $88 billion. As the Amazon glide-down comes to an end, the company
expects sales to drop in the first half of 2026. After that, sales should rise
steadily in the second half as the UPS Amazon delivery reduction stabilizes.
UPS also said that it is working to get back to normal volumes after the
end of the U.S. duty-free "de minimis" treatment for low-value
e-commerce shipments from Chinese retailers like Shein and Temu.
The busiest time of year for shipping packages is from late November to
early January. During this time, the number of packages shipped each day can
double. UPS's strong performance in the holiday quarter showed that prices were
more stable in both the domestic and international markets.
"UPS had another good quarter, mostly because they made more money
per package in both their domestic and international operations," said
Jonathan Chappell, an analyst at Evercore ISI. He noted that prices stayed
strong even though volumes were lower.
Investors seem to like that UPS is focusing on expanding its margins,
keeping prices in check, and making money in the long term, even if it means
losing some scale.
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