UPS to Cut 20,000 Jobs Despite Earnings Beat Amid Likely Amazon Pullback

United Parcel Service $UPS ( ▲ 1.9% ) announced better-than-expected first-quarter profits today while simultaneously revealing plans to cut approximately 20,000 jobs and close 73 facilities as the shipping giant grapples with reduced Amazon $AMZN ( ▼ 0.12% ) shipments and economic uncertainty.

The dramatic workforce reduction comes as the company reconfigures its network in what may be the most significant operational overhaul in its history^2,^3.

Q1 2025 Financial Performance Exceeds Expectations

The package delivery leader reported first-quarter earnings that surpassed market predictions, with adjusted earnings per share of $1.49, significantly higher than analyst expectations of $1.38^7.

This represents a 4.2% increase compared to the same period in 2024.

While consolidated revenues dipped slightly to $21.5 billion (a 0.7% decrease from Q1 2024), the figure still exceeded Wall Street's projections of approximately $21.05 billion^4.

The company's consolidated operating profit reached $1.7 billion, marking a 3.3% increase compared to the first quarter of 2024^1.

Key Financial Metrics for Q1 2025:
- Adjusted EPS: $1.49 (vs $1.43 in Q1 2024)
- Revenue: $21.5 billion (vs $21.7 billion in Q1 2024)
- Operating Profit: $1.7 billion (up 3.3% year-over-year)
- Operating Margin: 7.7% (8.2% on non-GAAP adjusted basis)

In the domestic U.S. segment, revenue increased by 1.4% to $14.46 billion during the quarter, supported by growth in air cargo and improved revenue per shipment, despite overall volume declines^4,^8.

This segment achieved an operating margin of 14.7% (15% on a non-GAAP adjusted basis)^1.

Major Workforce Reduction and Facility Closures

The most striking element of today's announcement is UPS's plan to eliminate approximately 20,000 positions throughout its U.S. network in 2025^2,^3.

This continues a trend of workforce reduction, as UPS had already trimmed its employee count from 500,000 at the end of 2023 to 490,000 by the end of 2024.

Additionally, the company revealed plans to close 73 leased and owned buildings by the end of June, while continuing to review its network for potential additional closures.

These aggressive cost-cutting measures are expected to generate savings of $3.5 billion in 2025^4,^8.

The company has stated that it's coordinating with its largest customers to adjust their operating plans in response to the facility closures.

For smaller shippers dependent on buildings being shuttered, UPS emphasized its UPS Store, Drop Box, and Access Point locations, noting that 90% of the U.S. population lives within five miles of these alternatives^3.

The Amazon Factor: Strategic Reduction in Volume

A key driver behind UPS's network reconfiguration is its strategic decision to reduce shipment volume from Amazon, its largest customer.

In January, UPS announced it would lower its Amazon volume by more than 50% by the second half of 2026^2,^7.

This strategic shift is already underway:

Amazon Volume Reduction Timeline:
- Q1 2025: 16% year-over-year decline (already achieved)
- Q2 2025: Expected additional 16% volume drop
- Q3 and Q4 2025: Anticipated 30% volume declines in both quarters

UPS leadership has indicated that the volume reduction specifically targets outbound shipments from Amazon's fulfillment centers, which the company considers unprofitable and not well-suited for its network^3.

Meanwhile, UPS is maintaining more profitable returns volume and outbound shipments fulfilled by third-party sellers on Amazon's platform.

Automation Push Amid Network Transformation

As UPS reduces its workforce and facility footprint, it's increasingly relying on hubs with automated sortation processes.

Automated hubs currently handle approximately 64% of UPS's volume, representing a 4.5% increase year-over-year^3.

This push toward automation likely contributes to the company's ability to maintain and even improve operating margins despite the operational upheaval.

The company is positioning these changes as necessary to emerge stronger and more nimble in an uncertain economic landscape^2,^7.

Economic Uncertainties and Outlook

Despite the strong quarterly performance, UPS refrained from providing updates to its full-year outlook, citing "current macro-economic uncertainty"^1,^4.

In January, the company had projected full-year revenues of approximately $89 billion with an operating margin of around 10.8%^8.

Some analysts point to broader economic concerns, with trade tensions prompting businesses to reduce spending, which in turn decreases demand for shipping services between companies.

These economic headwinds appear to be factoring into UPS's conservative approach to forecasting.

Market Reaction

Investors responded positively to today's announcements, with UPS shares rising approximately 5% in premarket trading.

This represents a notable turnaround for the stock, which had lost more than 20% of its value year-to-date before today's announcement.

The market appears to be rewarding UPS for its proactive approach to cost management and network optimization, despite the significant workforce reductions.

The better-than-expected quarterly results likely also contributed to investor confidence.

Industry Implications

UPS's strategic pivot away from less profitable Amazon volume could signal broader changes in the shipping and logistics industry.

The company's willingness to sacrifice volume for profitability may influence how other carriers approach their relationships with major e-commerce players.

The extensive job cuts and facility closures also reflect ongoing pressures in the logistics sector, where companies continue to seek efficiencies through automation and network optimization.

This trend has significant implications for workers in the industry, who may face increasing job insecurity as companies pursue automation.

Logistics Industry Challenges in 2025:
- Uncertain global trade environment
- Shifting e-commerce dynamics
- Pressure to increase automation
- Need for network flexibility amid changing demand patterns
- Balance between volume and profitability

Long-term Strategy and Competitive Positioning

UPS's dramatic workforce reduction and facility closures represent a significant bet on a leaner, more automated future.

The company appears to be prioritizing profitability over volume, particularly in its relationship with Amazon, which it has described as its largest but not most profitable customer.

This strategic realignment may position UPS to better compete in a changing logistics landscape, where flexibility and efficiency are increasingly crucial.

By reducing its dependence on Amazon and optimizing its network, UPS could potentially improve its competitive position against rivals like FedEx and emerging logistics players.

Final Thoughts

Today's announcements from UPS reflect a company at a strategic inflection point, making difficult choices about workforce size, facility footprint, and customer relationships in pursuit of long-term profitability.

While the 20,000 job cuts will have significant human impact, the market's positive reaction suggests investors believe these moves will strengthen the company's position.

As UPS navigates what it calls possibly "the largest network reconfiguration in its history," the logistics giant is clearly betting that a leaner, more automated operation focused on profitable shipments will prove more sustainable than maintaining its previous scale.

The coming quarters will reveal whether this strategic pivot delivers the intended results in an uncertain economic environment.