UPS, the American giant in transportation and logistics, announced on April 29 a massive workforce reduction. This measure will affect 20,000 positions worldwide. This restructuring at UPS, which will extend until June 2025, primarily targets operational functions. Thus, delivery drivers, handlers, and sorting agents are the first affected.
73 UPS logistics sites will be closed, marking a turning point in the group’s organization. This announcement, unprecedented in scale, follows the 12,000 job cuts decided in January. Indeed, these cuts mainly affected senior executives. Founded in Atlanta in 1907, the company today employs nearly 490,000 employees in over 200 countries.
Amazon, a partner that became too burdensome
One of the underlying causes of this UPS layoff plan is the reassessment of the partnership with Amazon. Indeed, this situation has a major impact. The e-commerce giant accounted for up to 12% of UPS’s revenue. A dependency deemed excessive by the leaders, eager to diversify their clients and reduce their exposure to a dominant player.
Under a new agreement concluded in January, the volumes entrusted by Amazon to UPS are expected to drop by 50% by 2026. This decrease has led to a restructuring of internal logistics capacities. Thus, nearly 10% of logistics centers are threatened with closure. Additionally, some routes will be outsourced to subcontractors, profoundly altering UPS’s logistics strategy.
A reorganization dictated by profitability
Despite these radical decisions, the financial results for the first quarter of 2025 exceed analysts’ expectations. The group recorded a revenue of 21.5 billion dollars, a slight decline of 0.7%, but above forecasts. Its net profit increased by 6.6%, reaching 1.19 billion.
These seemingly solid performances mask a deeper transformation of UPS’s economic model. The company wishes to disengage from unprofitable segments, notably low-cost parcel delivery. It aims to focus on high-value-added activities. Thus, UPS is betting on temperature-controlled transport and pharmaceutical logistics. Additionally, it is investing in services for biotechnology companies.
Tense economic context and protectionist policies
The economic situation also heavily influences the industrial strategies of the logistics sector. The return of protectionist measures supported by the Trump administration, notably high tariffs on certain imported products, slows down international trade.
In this context, American logistics companies are reducing their inventories and adapting their flows. The domestic market is contracting, with a notable decrease in household consumption. UPS, heavily exposed to these dynamics, is under pressure from its shareholders and responds with drastic workforce adjustments.
Other players in the sector are adopting similar strategies. DHL, the main European competitor, announced in March the elimination of 8,000 positions worldwide. FedEx, on its part, is multiplying platform consolidations to generate economies of scale. Furthermore, it is strengthening its resilience to global economic challenges.
Robotization and work transformations
Beyond the cyclical context, the global logistics sector is experiencing a profound technological transformation. Since 2020, UPS has invested more than 3 billion dollars in warehouse automation. Moreover, it is developing robotic sorting systems.
These innovations accelerate operations, reduce costs, but render many jobs redundant. The job cuts at UPS are not solely explained by a crisis logic. Indeed, they result from an underlying trend linked to the digitalization of logistics work.
This dynamic raises questions about the evolution of the social contract in logistics companies. American unions, already weakened, struggle to respond effectively. In Europe, several professional organizations are calling for a strengthened social dialogue to manage the impact of these structural transformations.
Towards more specialized logistics
To ensure its transition, UPS is turning to high-value-added markets. In April, the company confirmed the acquisition of the Canadian group Andlauer Healthcare Group, specialized in medical logistics, for 1.6 billion dollars. This operation is part of the group’s ambition to establish a leading position in healthcare, with a goal of 20 billion in revenue by 2026.
UPS aims to reinvent itself as a premium logistics provider. Furthermore, it seeks to meet the demands of sensitive sectors like healthcare. The transport of vaccines, medical devices, or biological samples requires specific skills. Moreover, this offers higher margins and ensures better long-term financial visibility.
A transformation with significant consequences
The elimination of 4% of UPS’s global workforce is a strong signal. It marks the end of an era, where logistics was primarily about volume. Today, efficiency, precision, and logistical specialization take precedence.
This evolution is not without social damage. By cutting thousands of jobs, UPS raises questions about the social responsibility of multinational companies towards their employees. In a world where uncertainty becomes the norm, the dominant economic model seems to call for a rethink.
More than a company in transition, UPS reflects the upheavals of a globalized economy in transition. Between the need for competitiveness and the demand for social justice, the transformation of the logistics sector becomes crucial. Consequently, it serves as a valuable observatory of contemporary contradictions.