United Parcel Service (UPS) is facing challenges with high labor costs and declining parcel volumes, leading to a planned workforce reduction of 20,000 employees, approximately 4% of its global workforce. This initiative marks the first time in the company’s 117-year history that it is offering buyouts to full-time delivery drivers. UPS also plans to shut down 73 facilities to streamline operations and reduce costs.
In response to an economic slowdown and reduced demand, particularly from its largest customer, Amazon, UPS has reached an agreement to decrease Amazon’s volume by more than 50% by June 2026. Additionally, expenses related to compensation and benefits are projected to decline by 2.6% in 2025 after a 2.1% year-over-year increase in 2024.
Amid similar pressures, FedEx has also started cutting costs, laying off over 480 employees and implementing initiatives anticipated to yield $1.8 billion in savings for fiscal 2024 and further savings in subsequent years.
