UPS Earnings Impact :United Parcel Service (UPS) plans to cut 20,000 jobs and close 73 facilities by June 2025. This is because Amazon, its biggest customer, is sending fewer packages. Amazon makes up almost 12 percent of UPS’s 2024 income.
The slow economy also played a role in these job cuts. In 2024, UPS laid off 12,000 workers.
UPS hopes to save almost $3.5 billion this year. This will come from cutting jobs, closing buildings, using more automation, and selling assets. But, it will cost $400 million to $600 million in 2025 for separation benefits and lease costs.
Amazon volumes and tariffs impact growth
UPS said in January it will cut Amazon deliveries by more than half in 18 months. This is according to a Bloomberg report.
New US tariffs will start on May 2. They will affect e-commerce imports from China, like Temu and Shein. This will make fewer packages for UPS to deliver.
UPS CEO Carol Tomé said cutting costs is right because of the tough economy. The changes in trade policy under President Donald Trump have made things harder for UPS.
First-quarter results beat estimates
UPS did better than expected in the first quarter. Its revenue was $21.5 billion, just a bit less than last year. But, it was more than what analysts thought. The company made $1.49 per share, more than expected.
UPS’s US business grew 1.4 percent. This was thanks to more air cargo and better prices, even with fewer packages.
Stocks increased 4.6 percent on Tuesday after the earnings report.
Trump’s Trade War Backfires: UPS Earnings Reveal Impact on U.S. Small Businesses
Shift towards high-margin logistics
UPS is focusing on high-margin areas, like healthcare. It bought a Canadian company for $1.6 billion. UPS wants to make $20 billion from healthcare by 2026.
UPS won’t change its 2025 goals yet, even with economic uncertainty. It will update its second-quarter guidance on Tuesday.
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FAQs
1 . Why is UPS eliminating 20,000 jobs?
UPS is cutting jobs because it has fewer packages from Amazon. It wants to save money in a tough economy with higher tariffs.
2 . What are UPS’s future plans?
UPS is focusing on high-margin areas like healthcare. It bought a Canadian company and aims to make $20 billion from healthcare by 2026.
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