UPS Cuts 20K Jobs as E-commerce Delivery Patterns Shift

United Parcel Service announced sweeping workforce reductions Tuesday, eliminating 20,000 jobs and shuttering 73 facilities as it adapts to a transforming e-commerce landscape. The cuts, representing approximately 4% of the logistics giant’s global staff, reflect both strategic repositioning and responses to immediate economic pressures as the company dramatically reduces shipments for its largest customer, Amazon.

UPS declined to provide updated full-year financial guidance amid what executives described as unprecedented economic uncertainty. CEO Carol Tomé delivered a stark assessment to investors, stating, “The world has not been faced with such enormous potential impacts to trade in more than 100 years,” according to Reuters. These comments position UPS as the first major U.S. corporation to implement large-scale layoffs directly attributed to recent trade policy disruptions.

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E-commerce Shifts Reshape Delivery Networks

The Amazon relationship has been gradually evolving for years as the retail giant builds out its own delivery capabilities. What began as a mutually beneficial partnership has increasingly shifted toward competition as Amazon’s delivery network expanded to handle more of its own packages. Amazon surpassed UPS in total package volume in 2022, fundamentally altering the competitive landscape, as noted by PYMNTS.

In January, UPS announced plans to slash Amazon deliveries by more than 50% by mid-2026, five times faster than previous volume reductions. While Amazon accounted for 11.8% of UPS revenue in 2024, company leadership described the business as “extraordinarily dilutive” to profit margins, prioritizing financial efficiency over raw volume. “This was UPS taking control of our destiny,” Tomé explained when announcing the accelerated reduction.

Trade Policies Accelerate Network Changes

Beyond strategic repositioning, immediate economic pressures have complicated UPS’s transition timeline. The company faces particular challenges from recent policy changes affecting cross-border e-commerce. Starting May 2, shipments previously exempt from duties under the $800 de minimis threshold will face new tariffs, significantly impacting bargain retailers like Temu and Shein that rely on UPS services, according to Yahoo Finance.

The delivery giant’s decision to withhold updated financial guidance reflects widespread uncertainty across logistics networks as companies adapt to rapidly shifting trade policies. With U.S.-China tariffs now reaching 145% on most imports and China imposing 125% duties on American goods, traditional shipping patterns face unprecedented disruption, requiring fundamental network recalibration.

Focusing on Higher-Margin Segments

As UPS reduces its dependence on Amazon volumes, the company has identified healthcare logistics as a priority growth segment. The healthcare market offers substantially higher margins than standard e-commerce deliveries and is projected to expand from $130 billion to $152 billion by 2026, presenting significant growth opportunities, as highlighted by Zenventory.

UPS has set an ambitious target to double its healthcare-related revenue to $20 billion by 2026, focusing particularly on pharmaceutical deliveries. Pharmaceutical customers already generate 45% of UPS’s early morning delivery volume, reflecting the company’s strategic prioritization of this specialized segment with its unique handling requirements and higher profit potential.

Financial Markets Assess Transition Progress

Despite announcing substantial job cuts and facility closures, UPS delivered better-than-expected first-quarter financial results. The company posted an adjusted profit per share of $1.49, exceeding analyst expectations of $1.38. UPS shares rose modestly in early trading Tuesday, suggesting investors may view the painful restructuring as necessary for long-term competitiveness.

The company’s U.S. domestic segment revenue grew 1.4% to $14.46 billion in the first quarter, even as overall package volumes declined. This revenue growth amid volume challenges suggests UPS’s strategic shift toward higher-value shipments may already be showing signs of success despite the difficult transition process and uncertain economic environment.

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