According to the financial report for the first quarter of this year, the cuts will cover the entire UPS network in the United States. The company explains that this decision is primarily related to the planned reduction of cooperation with Amazon – UPS’s largest customer so far. It is not the result of external factors, such as tariffs and legislative changes.
In January 2025, UPS and Amazon agreed that by mid-2026, UPS’s shipping volume for the e-commerce giant would be reduced by more than 50 per cent.
“Due to the anticipated decline in volume from our largest customer, we have begun a network reconstruction process as an extension of our Network of the Future strategy. This includes consolidating facilities, optimizing headcount and fundamentally redesigning our processes,” UPS explained in an official statement.
In addition to the planned reduction in employment (20,000 positions, or about 4% of the global workforce), the company will close 73 locations by the end of June 2025 – both owned and rented. Further closures are possible.
“We continue to analyze our infrastructure and it is possible that we will identify additional facilities for decommissioning,” the company added in a statement.
UPS also announced accelerated automation, from sorting and labeling packages to loading and unloading vehicles. As many as 400 facilities are to be partially or fully automated. “This reorganization will also reduce our dependence on human labor,” UPS said.
Reducing cooperation with Amazon will increase profits
Although Amazon accounted for about 20-25% of UPS’s U.S. volume, it was not the most profitable customer, company representatives emphasized. In 2024, Amazon’s share of UPS’s revenue was 11.8%.
Amazon is our largest customer, but not the most profitable. Serving this company significantly diluted the domestic margin. We decided to limit cooperation because a large part of Amazon’s logistics service did not bring us benefits and did not fit into our network – explained the UPS CEO.
As a result of this decision, the volume of parcels from Amazon has already fallen by 16% in the first quarter of 2025 – which turned out to be a worse result than previously forecast.
Profit despite revenue decline
UPS’s consolidated revenue in the first quarter of this year was $21.5 billion (compared to $21.7 billion in the same period of 2024). Operating profit reached $1.7 billion. This represented an increase of 3.3% year over year.
The company admits that it is feeling the effects of tariffs imposed by the Donald Trump administration – especially 145 percent tariffs on goods from China – to a limited extent.
Customers who rely on imports from China are not giving up their business, but the market remains very uncertain, admitted Carol Tomé.
To be honest, there are still a lot of unknowns around orders from China. We don’t know if the announced changes will actually come into effect, or how long they will last, she added.
