Written by Queenie

United Parcel Service (UPS) has announced plans to lay off approximately 20,000 employees and shutter 73 facilities across the United States by the end of June 2025. This move is part of a significant restructuring effort aimed at reducing costs and adapting to shifting market dynamics, including a substantial decrease in package volumes from Amazon and challenges posed by global trade tariffs.

Key Drivers Behind the Restructuring

UPS’s decision is influenced by several converging factors:

Reduced Amazon Shipments: Amazon, UPS’s largest customer, accounted for nearly 12% of its revenue in 2024. However, UPS plans to reduce its Amazon-related volume by over 50% by June 2026, citing the need to focus on more profitable segments.  Impact of Tariffs: The reimplementation of significant tariffs on Chinese goods has disrupted global trade flows, affecting demand from retailers like Shein and Temu, and contributing to a decline in package volumes.  Operational Efficiency Goals: The restructuring is part of UPS’s broader “Network Reconfiguration” initiative, aiming to streamline operations and achieve $3.5 billion in cost savings in 2025. 

Details of the Closures and Layoffs

The 73 facilities slated for closure span multiple states, including Massachusetts, Pennsylvania, Wisconsin, and Ohio. For instance, the Boston, Massachusetts facility is scheduled to close on May 23, impacting 62 employees, while the Holmen, Wisconsin location will close on June 10, affecting 42 workers. 

The job cuts represent about 4% of UPS’s global workforce of approximately 490,000 employees. The company is working to reassign affected employees where possible, but significant reductions are expected across various operational roles. 

Union Response

The International Brotherhood of Teamsters, representing a significant portion of UPS’s workforce, has expressed strong opposition to the layoffs. Union President Sean O’Brien emphasized that UPS is contractually obligated to create 30,000 Teamster jobs under the current national agreement and warned of potential conflicts if the company violates this contract. 

Looking Ahead

Despite the current challenges, UPS reported first-quarter revenue of $21.5 billion, slightly exceeding Wall Street expectations. The company believes that the restructuring will position it for greater agility and profitability in the long term, focusing on higher-margin segments such as healthcare logistics and small to midsize businesses. 

As UPS navigates these significant changes, the broader logistics industry will be closely watching how these strategic shifts impact the company’s performance and the global supply chain landscape.