UPS has announced plans to streamline its workforce by eliminating 12,000 jobs, aiming to achieve significant cost savings totaling $1 billion.
This decision comes shortly after the company reached a costly agreement with the Teamsters union and amid subdued demand for its delivery services, which has led to a less optimistic annual revenue forecast.
According a report from Financial Times, the company announced on Tuesday that the job cuts will primarily target management positions, affecting approximately 85,000 employees.
It anticipates that three-quarters of these layoffs will occur within the first half of the year. UPS, with a global workforce of 495,000 individuals, does not foresee reinstating these positions in the foreseeable future.
The Delivery group said it now expected revenues in a range between $92 billion and $94.5 billion in 2024, below Wall Street forecasts for $95.6 billion. Its revenue in 2023 was $91 billion, a 9.3% drop from 2022.
UPS, often regarded as a bellwether for the global economy due to the breadth of packages and documents it ships, reported fourth-quarter revenue of $24.9 billion that was down 8% year on year and missed Wall Street forecasts due to a decrease in average daily parcel volumes.
Plans acquisition of Coyote, a truckload brokerage business
The company also announced it would explore strategic alternatives for its acquisition of Coyote, a truckload brokerage business, which made up 38% of the revenue decline in the company’s supply chain solutions business during 2023.
- “2023 was a unique and, quite candidly, a difficult and disappointing year,” chief executive Carol Tomé said on Tuesday.
In addition to the workforce reductions, Tomé confirmed that workers were now expected to come to the office five days a week.
UPS shares were down about 7.5% in morning trading in New York on Tuesday.
What you should know
UPS in July reached a pay deal with the Teamsters, which represents 340,000 of its 500,000 employees, that resulted in a 12.1% increase in union wage rates.
The agreement helped avert a potential strike, which had threatened to cause economic chaos by stranding more than a quarter of all parcels in the US, but the company months later trimmed its 2023 financial guidance and said the deal would weigh on revenue and margins.
