United Parcel Service (UPS) has unveiled a significant restructuring plan that will see the elimination of up to 30,000 operational positions and the closure of 24 facilities by 2026. This strategic move aims to transition towards more lucrative delivery segments. The announcement follows a tumultuous year in which the global courier giant cut 48,000 jobs and streamlined operations at 93 locations, targeting an ambitious savings goal of approximately US$3 billion for the current year.
Planned Job Reductions and Facility Closures
During a recent post-earnings call, UPS Chief Financial Officer Brian Dykes confirmed that the forthcoming workforce reductions would primarily be achieved through attrition. The company also anticipates launching a second voluntary separation programme for full-time drivers. This development comes as UPS refines its operational focus, seeking to bolster profitability amid shifting market dynamics.
The company’s decision to reduce its workforce is tied closely to its ongoing efforts to curtail low-margin deliveries, particularly those associated with Amazon. Since Amazon stands as UPS’s largest customer and a burgeoning competitor in the delivery space, the firm has labelled its Amazon-related business as severely detrimental to profit margins. CEO Carol Tomé noted, “We’re in the final six months of our Amazon accelerated glide down plan, and for the full year 2026, we intend to glide down another million pieces per day while continuing to reconfigure our network.”
Financial Performance and Market Response
Despite the impending job cuts, UPS’s recent quarterly results exceeded Wall Street expectations, leading to a 2.8 per cent increase in its stock price during early trading. Shares of FedEx, a key competitor, also saw a rise of 2.5 per cent, reflecting optimism across the sector.
UPS reported a consolidated revenue of US$24.5 billion for the fourth quarter, surpassing analysts’ predictions of US$24 billion. This surge is particularly important as the peak holiday shipping season can significantly amplify volumes for parcel carriers. The revenue per shipment in the U.S. domestic segment experienced an 8.3 per cent increase, while international revenue per piece rose by 7.1 per cent, driven by UPS’s strategic pivot towards higher-margin shipments.
Future Projections and Market Dynamics
Looking ahead, UPS forecasts its 2026 revenue will reach US$89.7 billion, up from US$88.7 billion reported last year. This optimistic outlook is buoyed by a strong performance in the fourth quarter, where adjusted profits reached US$2.38 per share—above the anticipated US$2.20.
However, the company anticipates a decline in revenue during the first half of 2026 due to the final phases of its Amazon “glide-down.” After this adjustment period, UPS expects to see a sequential rise in revenue as it completes its operational restructuring.
Why it Matters
The strategic overhaul at UPS highlights a critical shift in the logistics landscape, underscoring the need for adaptability in response to evolving market conditions. As the company navigates the challenges of reduced low-margin deliveries and global trade policy shifts, these workforce reductions and facility closures may reshape not only UPS’s operational framework but also the broader parcel delivery industry. The implications of this restructuring extend beyond UPS, potentially influencing competitor strategies and the future of e-commerce logistics.
