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UPS Announces Significant Layoffs in 2024, Cutting 12,000 Jobs and Seeking $1 Billion in Cost Savings

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UPS, the global logistics giant, has announced plans to lay off 12,000 employees, representing 14% of its managerial workforce, as part of an initiative to achieve a substantial $1 billion in cost savings. This workforce reduction is a response to what CEO Carol Tomé termed a “difficult and disappointing year” for the company in 2024.

The layoffs are slated to impact both full- and part-time managers, with approximately 75% of the cuts expected to take place in the first half of the year. According to UPS Chief Financial Officer Brian Newman, these changes signify a fundamental shift in the company’s operational strategy. Newman explained, “It’s a change in the way we work. As volume returns to the system, we don’t expect these jobs to come back. It’s changing the effective way that we operate.”

This downsizing follows a broader trend of staff reductions at UPS, with the company having already seen a decrease of 45,000 employees since the peak demand observed during the Covid-19 pandemic in 2021. The current move is seen as part of UPS’s efforts to adapt to the evolving logistics landscape and streamline its operations in the face of challenges arising from its recently negotiated five-year contract with the Teamsters.

In addition to the layoffs, UPS is actively exploring strategic alternatives for Coyote Logistics, a freight brokering company it acquired in 2015 to diversify its portfolio. CEO Carol Tomé conceded that, at the time of the acquisition, UPS did not fully grasp the cyclical nature of the freight business. The freight industry is prone to “boom” and “bust” cycles, and the current freight recession, ongoing since late 2022, has contributed to declining revenues at freight brokerages industrywide. Coyote Logistics, which saw a peak in revenue during the Covid-19 pandemic amid increased e-commerce demand, has experienced a significant drop in revenue since then.

Alongside the layoffs and strategic evaluations, UPS is also set to close 30 UPS Stores as part of its consolidation efforts. The company’s financial outlook for 2024 includes a disappointing revenue projection, expecting global revenue between $92 billion to $94.5 billion, falling short of analyst expectations.

Despite the challenging circumstances, UPS remains focused on recovering diverted packages from the Teamsters labor negotiations. The company aims to share more details about its cost-saving strategies and multi-year performance targets during an investor day event on March 26. The anticipated layoffs underscore the complex dynamics and pressures facing UPS in 2024 as it strives to adapt to changing market conditions and maintain its position as a leader in the global logistics industry.

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