UPS Faces Significant Challenges
United Parcel Service (NYSE: UPS) shares have dropped nearly 30% in 2023 due to declining second-quarter domestic parcel volume and revenue. The company’s revenue from business-to-consumer deliveries fell by 10.9% in Q2, influenced by its departure from a major contract with Amazon. The increase in competitive pressures and reduced margins from e-commerce deliveries have weakened investor confidence.
UPS aims to implement a cost savings plan to save approximately $3.5 billion by 2025, which will include closing facilities and reducing its workforce by 20,000 jobs following a recent union agreement that increased employee costs. Despite these challenges, growth in business-to-business (B2B) and healthcare logistics could provide new revenue streams as UPS pivots away from shrinking consumer delivery volumes.
