UPS to Cut 20,000 Jobs, Close 73 Locations Amid Amazon Slowdown

United Parcel Service (UPS), a prominent American logistics giant, has announced plans to reduce its workforce by approximately 20,000 operational positions this year. This decision comes as the company's largest client, Amazon, has experienced a significant decline in business. The company aims to close 73 leased and owned business locations by the end of June. UPS's CEO, Carol Tome, stated during a financial earnings call that the company is taking steps to "reconfigure" its operations in response to the "changing trade environment." Tome highlighted the significant uncertainty in the current macroeconomic environment, with tariffs being a major contributing factor.

This round of layoffs follows a previous reduction of 12,000 employees earlier this year, making it the largest workforce reduction in the company's history. The move is part of a broader strategy to mitigate the impact of tariffs and other economic pressures. UPS has also withdrawn its financial guidance for the year, citing the uncertainty caused by the tariffs. The company aims to reduce costs by $3.5 billion through this restructuring effort. Additionally, UPS has reached an agreement with Amazon to reduce its transportation volume by more than 50% by June 2026. Amazon had previously accounted for approximately 12% of UPS's revenue. Tome explained that reducing reliance on Amazon is necessary to avoid diminishing returns, as Amazon, while being the largest client, is not the most profitable one.

Despite the reduction in business from its largest client, UPS reported better-than-expected financial performance for the first quarter. The company's total revenue for the quarter was $21.5 billion, a 0.7% decrease from the previous year. However, its operating profit increased by 3.3% to $1.7 billion. Analysts have noted that while the company's performance exceeded expectations, the long-term impact of the tariffs and the reduction in business from Amazon remains uncertain. The company is focusing on diversifying its client base and increasing its presence in higher-margin sectors such as healthcare and small to medium-sized enterprises.

UPS's decision to downsize its workforce and close multiple locations is part of a broader trend among companies affected by the ongoing trade tensions. Several other major corporations, including Nestle, Heinz, and Hilton, have also announced downward revisions to their revenue growth projections for the year. The uncertainty caused by the tariffs and the changing trade environment has made it difficult for companies to plan for the future. The impact of these trade policies is expected to continue to ripple through the business community, affecting everything from supply chains to consumer prices.