ATLANTA, Georgia: United Parcel Service is cutting 20,000 jobs and closing dozens of facilities, marking one of its biggest shakeups in years as it grapples with reduced shipping volumes from Amazon and escalating U.S.-China trade tensions.
The delivery giant said this week it would also shutter 73 locations, part of a broader effort to streamline operations and reduce costs amid a major restructuring. A UPS spokesperson cited the loss of 50 percent of its shipping volume from Amazon.com, its largest customer, along with other cost-cutting initiatives.
“Due to their operational needs, UPS requested a reduction in volume, and we certainly respect their decision,” an Amazon spokesperson said.
The decision comes as President Donald Trump’s renewed tariffs on Chinese imports add to economic headwinds. Earlier this month, the administration imposed new 145 percent levies on a broad range of Chinese goods, prompting fears of a supply shock.
UPS CEO Carol Tome acknowledged the challenge. “The world hasn’t been faced with such enormous potential impacts to trade in more than 100 years,” she said during the company’s earnings call.
The company said it would protect profitability by cutting $3.5 billion in costs by 2025. A large portion of the Amazon-related volume being cut was considered unprofitable, especially shipments from fulfillment centers.
UPS forecasts its second-quarter operating margin at about 9.3 percent, falling short of the double-digit margins investors typically prefer. The company’s core U.S. business is expected to see a nine percent drop in average daily packages and a slight decline in revenue.
Teamsters Union President Sean O’Brien criticized the move, noting UPS is contractually obligated to create 30,000 jobs under its agreement with the union. “If the company intends to violate our contract… UPS will be in for a hell of a fight,” he said.
UPS said it plans to honor its commitments. The company employs 406,000 people in the U.S., over 75 percent of whom are union members.
Though UPS is seeing increased shipping activity from Europe, Vietnam, and Thailand, China remains its most profitable international trade lane. Last year, roughly 11 percent of UPS’s global revenue came from China.
With upcoming policy changes, including the end of duty-free status for e-commerce sellers like Shein and Temu, UPS could face further volume losses. Chief Financial Officer Brian Dykes warned that if tariff disputes continue, “a supply shock” is possible.
Shares closed down 0.4 percent on April 29.