United Parcel Service (UPS), one of the world’s largest logistics operators, has unveiled a deep restructuring of its operating network as it accelerates its reduction of dependence on Amazon. The company will eliminate as many as 30,000 operational positions by 2026 and close 24 facilities as part of a cost-cutting plan aimed at saving nearly $3 billion this year. This decision follows a gradual reduction of more than 50% in the volume processed for Amazon, with about 1 million fewer packages per day, significantly impacting the carrier’s parcel division.
The strategic goal is clear: to focus more on higher-margin segments, such as healthcare logistics, while modernizing the network thru increased automation. Despite this transition, UPS beat market expectations in the last quarter, with solid revenue and growth in revenue per package, which helped its stock gain ground. However, the headcount reduction is expected to be gradual, mainly thru attrition and voluntary departure offers, thereby reducing the direct social impact. This reorientation comes at a time when UPS is seeking to enhance the efficiency of its global distribution network in a context of lower volumes but increased pressure on margins.
