UPS is sometimes seen as a bellwether for the worldwide economy.
The United Parcel Service (UPS) on Tuesday announced 12,000 job cuts after reporting a decline in the volume of packages being shipped, coming months after the company came to an agreement with a top union to pay drivers higher wages.
Officials with the shipping firm confirmed to several news outlets the number of job cuts, saying they represent fewer than 3 percent of the firm’s overall worldwide workforce. The cuts also do not impact union-backed employees.
“In 2023, dynamic external and economic conditions led to lower volume and a more than $9 billion decline in revenue year over year,” UPS Director of Financial and Strategy Communications Brian Hughes told USA Today, confirming the figure.
The job cuts will save the firm about $1 billion, the company’s CEO, Carole Tome, told reporters on an earnings call.
“I want to thank UPSers for providing the best on-time performance of any carrier for the sixth year in a row,” the CEO said in a statement Tuesday, adding that “2023 was a unique and difficult year and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth.”
The UPS managers did not say what positions would be eliminated.
UPS, sometimes seen as a bellwether for the global economy, said business conditions are not expected to improve until the second half of 2024. On Tuesday, it forecast full-year revenue in the range of $92 billion to $94.5 billion, below analysts’ estimates of $95.57 billion, based on LSEG data.
“Some of this performance was due to the macro environment and some due to disruptions associated with our labor contract negotiations as well as higher costs associated with the new contract,” Ms. Tome said on the call.
The Atlanta-based company is being squeezed by higher labor costs from its new contract with the Teamsters union and declining average daily volume. In July, UPS agreed to a contract with the Teamsters worth about $30 billion to up full-time workers’ pay to $49 per hour and $21 per hour for part-time employees.
