Like FedEx before It, UPS to Walk away from Amazon Business

With its stock price down about 33% over the past year and a prior decision to walk away from much of its Amazon business, UPS announced this week it plans on a mass layoff of some 20,000 workers in 2025

Supply Chain Digest Says... "If UPS wants to continue to downsize corporate management, the Teamsters won't stand in its way," O'Brien said. "But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight." What do you say? Click here to send us your comments

In addition, UPS said it will shutter nearly 75 facilities – mostly parcel hubs – as another element of a huge cost cutting effort. UPS said it expects the site closures to be completed by the end of June.

Amazon said it has a goal of reducing its operating costs by $3.5 billion this year, all part of its “Network of the Future” initiative.

UPS said the move was driven in part by its decision – announced in Q1 - to reduce its volume of deliveries it does for Amazon, involving as much as a 50% reduction in those parcels. Amazon says it is losing money on much of its Amazon business. Amazon accounted for 11.8% of UPS sales in 2024.

According to an Amazon spokesperson, “Due to their operational needs, UPS requested a reduction in volume and we certainly respect their decision." That is according to Reuters.

All this at the same time parcel volumes are expected to slow sharply due to a slowing economy and large tariffs that are likely to reduce UPS volumes of deliveries from China to the US. That includes a US decision that starting May 2, it will now collect tariffs on goods that were duty-free up to $800 per individual shipment.

“The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier,” CEO Carol Tome said.

UPS shed some 12,000 jobs in 2024, none of which were drivers.

The 20,000 employees scheduled for layoffs represent about 4% of the company’s 490,000 employees worldwide.

According to Sean M. O'Brien, the Teamsters general president, UPS is contractually obligated to create 30,000 Teamsters jobs under their current national master agreement.

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"If UPS wants to continue to downsize corporate management, the Teamsters won't stand in its way," O'Brien said. "But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight."

In 2024, UPS delivered an average of 22.4 million parcels per day, or 5.7 billion for the entire year.

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