UPS announced Tuesday it plans to cut 20,000 jobs this year, a cost-cutting effort related to the delivery giant's decision to deliver fewer packages from its largest client, Amazon.
The transportation company operates in more than 200 countries and currently employs approximately 490,000 people. Layouts will affect more than 4% of their workforce. This was announced in a UPS announcement last year that it would cut 12,000 positions.
The move is part of the company's plan to consolidate UPS facilities and workforce. With the layoffs on the job cuts, the company announced it would close 73 of its buildings by the end of June 2025 and said it could target other buildings to close.
"These actions will allow us to expand domestic operating profits and increase profitability," UPS Chief Financial Officer Brian Dykes said on Tuesday morning's earnings call.
UPS said in a regulatory filing Tuesday that the cuts were related to expectations of our largest customers. The company announced $21.5 billion in revenue over the past quarter, and the company expects to save $3.5 billion this year due to its merger plan.
Teamsters president Sean M. O'Brien said UPS is obliged to create 30,000 teams of work under the current National Masters Agreement.
“If UPS wants to continue to reduce the size of the company’s management, then team members won’t get in the way,” O’Brien said. “But if the company intends to breach our contract or make any attempt to pursue hard, well-paid team work, then UPS will fight.”
The company said in January it had reached an agreement with Amazon to reduce its delivery volume by more than 50% in the second half of 2026.
"A reduction in packaging volume at Amazon is something UPS chooses to do and improves domestic operating margins and profitability," a UPS spokesperson told CBS MoneyWatch in an email.
Amazon said in an email to CBS MoneyWatch that the company has a "strong working relationship" with UPS and is actually willing to increase UPS sales before the delivery company decides to reduce its Amazon shipment.
“UPS requires a reduction in numbers due to their operational needs, and we certainly respect their decisions,” said Amazon spokesman Kelly Nantel. “We will continue to work with them and many other carriers to serve our customers.”
UPS offers millions of bags worldwide every year. Last year, the company provided an average of 22.4 million parcels per day and 5.7 billion per year.
UPS stock fell to 55 cents, or 0.6%, to $96.61 in afternoon trading.
In its quarterly earnings statement, the company also mentioned the risk that global trade policy could change its business. The Trump administration has introduced widespread new tariffs in recent months that have begun to affect the flow of goods at home and abroad, as well as around the world.
UPS processes about 400,000 imported parcels per day, about 2% of the parcels they move daily. Nevertheless, the company will still be affected if the trade war between China and the United States continues.
"From an income standpoint, last year, our Chinese revenue to the U.S. trade lane accounted for 11% of our international revenue," CEO Carol Tomé said on Tuesday's revenue call. "Our Chinese to the U.S. trade circle is our most profitable trade circle."
UPS enables customers to understand tariff development projects side by side on their website. It also introduces a tool called UPS Global Checkout, which shows online shoppers the upfront fees they have to pay for responsibilities, fees and taxes.
Amazon is also under pressure from tariffs. White House Press Secretary Karoline Leavitt Tuesday Accused of retailer Political news website Punchbowl reports that Amazon plans to display tariff fees next to product prices, engaging in "hostile and political behavior."
"When the Biden administration rose to its highest level in 40 years, why didn't Amazon do that?" Levitt said in a press conference.
Amazon delayed the report and said in a statement to CBS News on Tuesday that its Amazon shipping store "considered the idea of listing import fees on certain products." Amazon runs Introduction to the second half of last year Low-cost goods are sold by e-commerce giants to compete with Temu and Shein.
"This has never been approved and will not happen," said Tim Doyle, an Amazon spokesman.