UPS announced Tuesday that it will reduce its workforce by 20,000 positions this year—about 4% of its global staff—but clarified that the cuts are not traditional layoffs. Instead, the company says the reduction is tied to increased automation and a planned pullback from its business with Amazon.
In January, UPS began scaling down its partnership with Amazon, its largest customer, deeming the relationship no longer financially beneficial. CEO Carol Tomé said that many of the packages from Amazon are not profitable and that the shift is better for UPS’s future.
The job cuts are largely the result of tech-driven efficiencies. The company is incorporating more automation into package handling, particularly in its warehouses and truck-loading facilities. It will also close over 70 buildings by June as part of this strategy.
While concerns around U.S. tariffs and tensions with China remain, Tomé noted that the staffing cuts are unrelated to those factors. She added that UPS is still assessing the broader impact of tariffs on customer behavior and the economy.
Despite the changes, UPS said consumer sentiment remains relatively strong and that it isn’t yet adjusting its full-year guidance—but may do so if conditions shift.
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