Read this on LinkedIn, so don’t have anything to link.
This is a pretty big deal. Surprised nobody has posted about this today here.
In its earnings release today, UPS says it will cut 20,000 operations jobs in 2025 and close 73 buildings by the end of June as it expects more declines in parcel volumes.
UPS had decided in January to reduce the amount of packages it takes from Amazon, saying that it wants to cut down the number of unprofitable packages that were unhealthy for its network, but keep more profitable ones like returns and other seller-fulfilled parcels. UPS added that it wants to be less reliant on labor and to invest in more automation.
The parcel giant also declined to update its previous full-year outlook amid macro-economic uncertainty and tariff changes.
“Current consumer sentiment is down from where it was at the beginning of the year,” said UPS CEO Carol Tomé.
Customers that import goods are still considering options. Small businesses that source solely from China are facing more difficulties. UPS says it expects ~25% fall in demand in the China to U.S. trade lane.
But that could be offset by higher demand in China to non-U.S. lanes and from non-China to U.S. lanes. When tariffs were implemented during Trump’s first administration, UPS said its international business actually grew.
BTW - Who is going to handle SPD FBA shipments if not UPS?
I mean, nothing has been officially announced but seems strange. Almost everything we ever got from Amazon, that didn’t come in a smile van, was shipped USPS from FBA or a 3P seller.
Confused on where this massive volume loss for UPS, from Amazon is actually coming from. Must be a geographical thing.
UPS is a bellwether for global commerce. The move signals deeper trade risks tied to President Trump’s 145% tariffs on Chinese imports. UPS’s China-to-U.S. shipments made up 11% of its international revenue last year, and executives say sourcing alternatives will take years to ramp up.
The restructuring follows UPS’s decision to drop 50% of its volume from Amazon, its largest client. UPS also cited weakening demand from China-based sellers such as Temu (PDD, Financials) and Shein, especially with new U.S. tariffs and the end of duty-free treatment set to begin in May.
ETA:@ASV_Vites I marked this post as the solution only so that there’s a link embedded in OP.
UPS announced it was limiting the number of packages it would deliver for Amazon a few months back. This was a UPS decision which they claimed was based on too much reliance on heavily discounted Amazon rates for FBA shipments from Amazon to buyers.
The revenue reduction should have already been priced into the stock. This was not a surprise, nor based on the tariffs.
The stock drop of .37% was not significant and reflects the market drift. UPS earnings exceeded estimates.
All of my Temu orders came via a partnered Chinese carrier with last mile by USPS. Even those which came from the US.
Leave us not fail to recognize that UPS’ “Better, Not Bigger” Initiative is - and always has been, by all available lights, all the way back to the closure of far-more than 73 Customer Service Locations some time back - focused sharply upon eliminating costly human personnel-staffed positions in favor of less-costly (in the long run, so they [the bigwigs] think) automation.
But we do not yet have the technology to replace the workforce at that level. This is clearly a reduction in force from lack of demand or they would simply automate facilities and remove the people, and/or UPS would announce new automated facilities in the last half decade foreshadowing this event.
I agree with your assertion of use of automation but IMO, the volume of layoffs do not align with the implementation of said technology at scale.
While it’s likely that UPS expected to make some cuts related to the Amazon service reductioon, it’s clear that the magnitude of the cuts announced yesterday was affected by tariffs.
@ASV_Vites@lake@primetime note that it was only a 50% reduction in Amazon service. Another article I read yesterday said that UPS intended to continue handling FBA inbound and Amazon returns because those were the most profitable packages.
When I pulled 170+ units from fba (my light switch covers which are small) even though they were sent usps and not ups Amazon still sent the majority of my orders individually packaged. I had a few packages with 2 or 3 pieces in them but for the most part it was all single item packages. My mail carriers were confused as to why I was getting so many poly mailers all at once from Amazon.
So I can easily see why UPS wouldn’t want to deal with that if Amazon plays the same shenanigans when shipping back larger fba recalled inventory.
It seems to me that lately large corporations have used “external drama” or “advances” as a means to do layoffs without having to come out and say they are culling the herd just to cull the herd.
Tech companies used AI being robust enough to make jobs easier as an excuse to do their culls.
Sure isn’t me. I’ve noticed on some of our fraudulent returns we received a positive adjustment on the shipping. We got 1 penny.
Package they expected was 20.5 x 16.4 x 8.8 inches weighing 7.85 lbs. They “audited” it by changing the weight to 22 lbs. What was actually returned was an empty 7.5 x 5 inch mailer weighing less than 1 lb. And they gave us a penny back.
When I started in 2018 we effed up big time and had to recall 1600 units.
I think I got back about 500 packages total. UPS driver was so pissed he was chucking the boxes from the sidewalk up the stairs, barely getting out of his truck
I’m guessing that is a consequence of Amazon insisting that every household has to be within ten minutes of one of their warehouses.
Your covers were spread across every Zip Code in every state in the country for ‘efficiency’ purposes. Never mind that they couldn’t sell while all the internal transfers were taking place!
You could have contacted Amazon to tell them about their mistake and to tell them they could have their money back. You would have ended up double reimbursed!
