In a significant move reflecting the changing dynamics of the logistics industry, United Parcel Service (UPS) announced on April 29, 2025, plans to lay off approximately 20,000 employees this year. This decision is largely driven by economic uncertainty and a notable pullback from Amazon, the company’s largest customer. In conjunction with these layoffs, UPS will also close 73 facilities by the end of June 2025.
UPS CEO Carol Tomé addressed the company’s strategic adjustments during an earnings call, stating, "The world has not been faced with such enormous potential impacts to trade in more than 100 years." She emphasized that the cutbacks are a necessary response to President Trump’s tariffs, which have dramatically altered the global trading landscape. Tomé expressed confidence that these measures would ultimately position UPS as a stronger and more agile company, saying, "With our actions, we will emerge as an even stronger, more nimble UPS."
These layoffs and facility closures are part of a broader strategy known as the "Network Reconfiguration," which aims to align UPS’s operational capacity with anticipated declines in shipping volumes from Amazon. Earlier this year, UPS had already announced a significant reduction in its shipping volume for Amazon, projecting a decrease of more than 50% by the second half of 2026. This move is designed to shift the company’s focus toward more profitable delivery options.
Despite the impending layoffs, UPS reported a slight revenue dip in its first-quarter earnings, reporting $21.5 billion, which marks a 0.7% decrease from the same period last year. However, the company’s adjusted operating profit saw a modest increase of 0.9%, reaching $1.7 billion. The company’s stock experienced a slight uptick of about 1% in premarket trading following the announcement, reflecting investor confidence in the company’s long-term strategy.
UPS’s decision to reduce its workforce comes at a time when the company is grappling with the realities of a changing market. In 2024, Amazon shipments accounted for 11.8% of UPS’s overall revenue, underscoring the importance of this customer relationship. However, Tomé pointed out that while Amazon is UPS’s largest customer, it is not necessarily the most profitable. This insight has guided the company’s decision to reassess its partnership with Amazon and to focus on more lucrative shipping options.
Looking ahead, UPS anticipates saving approximately $3.5 billion in 2025 as a result of these strategic layoffs and facility closures. Of that, about $500 million is expected to be realized in the first quarter alone. The company has not provided updates to its full-year guidance, citing ongoing macroeconomic uncertainties.
As part of its restructuring efforts, UPS is also leveraging automation to enhance its operational efficiency. Currently, automated hubs handle around 64% of UPS’s volume, a figure that has increased by 4.5% year over year. This shift towards automation aligns with the company’s goal of reducing costs while maintaining service levels.
Tomé assured investors and stakeholders that the company is working closely with its largest customers to adjust operational plans in light of the facility closures. For smaller shippers who rely on UPS’s physical locations, the company highlighted its network of The UPS Store, Drop Box, and Access Point locations, which are designed to remain accessible to customers. "Ninety percent of the U.S. population lives within five miles of these locations, and about two-thirds of them are open on Sunday for added convenience," Tomé noted.
In summary, UPS’s decision to cut 20,000 jobs and close numerous facilities is a pivotal response to the evolving landscape of the logistics sector, particularly in light of its shifting relationship with Amazon. The company’s leadership is optimistic that these changes will not only help UPS navigate current economic challenges but also position it for future growth and profitability.
As UPS implements these changes, it will be crucial for the company to balance operational efficiency with customer satisfaction. The logistics giant’s ability to adapt to market demands while maintaining service quality will be closely monitored by industry analysts and stakeholders alike.
