UPS Axing 20,000 Jobs as Amazon Shipments Decline

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UPS is planning to eliminate 20,000 jobs this year and close 73 buildings by June. These decisions follow the company’s choice to reduce its volume of Amazon shipments, which have long made up a significant portion of its delivery business. Although Amazon is UPS’s largest customer, the company has opted to cut ties with a major portion of that volume in favor of higher-margin alternatives.

The shift is part of a wider cost-cutting and network consolidation effort. UPS executives say they expect to save $3.5 billion in 2025 by downsizing operations and exiting low-yield contracts. This is not the first move in that direction. In 2024, UPS cut 12,000 jobs. The current round affects over 4% of the workforce.

UPS-Amazon Relationship Reassessed

UPS says this decision is based on profitability. CFO Brian Dykes and CEO Carol Tomé explained that while Amazon provides volume, it does not provide strong margins. Tomé described the Amazon contract as dilutive to the company’s domestic earnings. By cutting back on Amazon shipments, UPS hopes to improve its U.S. operating margin and shift toward more profitable delivery partnerships.

Amazon confirmed that it had offered to increase UPS’s volume, but UPS declined. Both companies said the relationship remains positive. Still, the restructuring makes it clear that UPS is moving away from volume-based business and prioritizing margin over scale.

Facility Closures and Labor Tensions

The closure of 73 UPS facilities represents a major physical contraction. More facilities could be shuttered as the company continues evaluating its footprint. While UPS maintains this is necessary to remain competitive, the move has sparked concerns among labor leaders.

Teamsters President Sean O’Brien warned that while the company may reduce corporate roles, any attempt to undermine its contractual obligation to create 30,000 union jobs would not be tolerated. This sets the stage for possible disputes later in the year, especially if more closures target facilities staffed by union workers.

Trade Uncertainty Adds Pressure

UPS also flagged global trade policy as a growing concern. With President Trump introducing new tariffs, international shipments could become more expensive and less frequent. Currently, 11% of UPS’s international revenue comes from China–U.S. trade lanes. These are among the company’s most profitable routes, and any disruption could weaken results.

To manage this risk, UPS is promoting a new online tool called Global Checkout, which displays all duties and fees at the point of sale for international buyers. This aims to keep volume stable despite trade headwinds.

Investor View: Short-Term Pain, Long-Term Pivot

In the most recent quarter, UPS reported $21.5 billion in revenue, beating expectations. Earnings also came in ahead of forecasts. However, the company declined to update its full-year guidance, citing economic uncertainty and ongoing restructuring.

Investors should see this move as a calculated risk. Cutting a major client like Amazon is bold but reflects a clear pivot to quality over quantity. The facility closures and job cuts, while painful, are part of a broader shift toward leaner, higher-margin operations.

The success of this strategy depends on UPS’s ability to fill the gap left by Amazon with clients that bring stronger returns. It also hinges on the company’s ability to manage labor expectations and avoid disruptions.

For investors watching the logistics sector, UPS’s decision may be a sign of changing priorities in a post-pandemic, tariff-exposed environment. It rewards discipline and puts profitability above growth for growth’s sake.

Is UPS making the right decision by shrinking its Amazon business in favor of profitability? Tell us what you think!

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