UPS plans massive layoffs as Amazon reduces orders
UPS has announced plans to lay off 20,000 employees due to an expected drop in orders from Amazon, its major client. The company is also aiming to reduce costs amidst economic uncertainty related to widespread tariffs, Reuters reports.
In the first quarter of 2025, UPS exceeded market expectations with its profit. Despite this, the company plans to let go of 20,000 employees to cut costs considering the anticipated decline in Amazon orders, reported Reuters.
UPS shares rose by nearly 2% in pre-market trading on Tuesday after the company announced it expects to save $3.5 (CAD 4.8) billion by 2025, thanks to staffing cuts and the closure of 73 rented and owned facilities by the end of June.
The company, however, didn't specify which countries would be affected by these mass layoffs.
Network reorganization and cost reduction
U.S. President Donald Trump introduced widespread tariffs that have slowed trade and forced companies to reduce costs in anticipation of decreased demand. This slowdown could lead to decreased demand for transportation services among package delivery companies like UPS.
The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier, stated UPS CEO, Carol Tome.
UPS did not provide updates on forecasts for the entire year due to economic uncertainty. However, it is focusing on cost reduction through layoffs, warehouse closures, increased automation, and the sale of assets, the report reads.
Impact on financial results
In the first quarter of 2025, UPS revenues slightly decreased to $21.5 (CAD 29.7) billion but still surpassed Wall Street expectations of $21.05 (CAD 29.1) billion. The domestic segment in the U.S. saw a revenue increase of 1.4% to $14.46 (CAD 20) billion, driven by an uptick in air shipments and improved revenue per package, despite a decline in volume.
UPS reported an adjusted earnings per share of $1.49 (CAD 2.1), exceeding analysts' expectations of $1.38 (CAD 1.9). Earlier this year, the company projected its annual revenue to be $89 (CAD 123) billion, with an operating margin of around 10.8%.
