UPS announced plans to eliminate 20,000 jobs and shutter 73 facilities by June 2025. The company revealed these measures alongside its first-quarter 2025 financial results, citing economic uncertainty and reduced demand from key customer Amazon.
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The workforce reduction, affecting 4% of UPS's global employees, aims to save $3.5 billion this year.
UPS expects expenses of $400 million to $600 million in 2025, primarily for severance benefits and lease-related costs. The company will close both leased and owned facilities, increase automation, and sell assets to streamline operations. CEO Carol Tomé emphasized the urgency of these actions. "The macro environment remains uncertain," Tomé said. "Our network reconfiguration and cost reductions position UPS to emerge stronger and more agile."
The job cuts follow a prior reduction of 12,000 positions last year. UPS also faces challenges from President Trump's tariffs, including a 145% rate on Chinese imports, which have disrupted trade flows. The impending removal of the de minimis exemption on May 2, allowing duty-free shipments under $800, further threatens low-cost imports from Chinese retailers like Shein and Temu. These changes have already reduced Chinese vessel sailings to the U.S. and prompted some vendors to skip Amazon's Prime Day.
Financial Performance and Amazon's Impact
UPS reported first-quarter revenue of $21.5 billion, surpassing analyst expectations of $21.05 billion, according to LSEG. U.S. segment revenue grew 1.4% to $14.46 billion, driven by higher revenue per piece despite lower overall volumes. Adjusted profit per share reached $1.49, beating forecasts of $1.38. However, UPS did not update its full-year 2025 forecast, which projects $89 billion in revenue and a 10.8% operating margin.
Amazon, UPS's largest customer, accounted for 11.8% of revenue last year. Earlier this year, UPS announced plans to cut Amazon deliveries by over 50% by mid-2026 to focus on high-margin parcels. This shift, combined with tariff-related demand declines, has strained UPS's operations. Shares dropped 1% in early trading Tuesday, reflecting investor concerns.
Navigating a Challenging Landscape
Tomé thanked UPS employees for their dedication amid these challenges. "Our integrated network and trade expertise will support customers navigating this dynamic environment," she said. As UPS adapts to tariffs, reduced e-commerce volumes, and shifting trade patterns, its cost-cutting measures aim to ensure long-term resilience. The company continues to monitor economic conditions, with further updates expected as the restructuring progresses.
