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| UPS Automation |
In a surprising announcement, UPS has revealed plans to cut 20,000 jobs in 2025 — about 4% of its global workforce. But before jumping to conclusions, it's important to understand what’s really behind the move. Contrary to expectations, this isn’t about tariffs or trade wars. Instead, UPS is pivoting hard toward automation and moving away from one of its biggest customers — Amazon.
Pulling Back from Amazon: A Strategic Shift
UPS had already hinted at this move earlier in January when it unveiled a “glide down” strategy to reduce its business with Amazon — a massive client but one that UPS says is no longer profitable. According to CEO Carol Tomé, the Amazon segment being cut "is not a healthy fit for our network."
That decision is already taking effect: Amazon-related package volume dropped 16% last quarter — a steeper decline than UPS anticipated. As part of the strategy, 73 U.S. facilities are set to shut down by the end of June.
The Rise of Automation: Less Labor, More Machines
UPS isn’t just shrinking its Amazon business — it’s reshaping its entire logistics operation. The company is rolling out automation in 400 facilities, streamlining everything from sorting and labeling to truck loading and unloading.
“With this reconfiguration, we will also lessen our dependency on labor,” Tomé said, signaling a shift toward a leaner, more tech-driven workforce.
Union Pushback: Teamsters Ready for a Fight
The decision hasn’t gone down smoothly with everyone. The Teamsters union, which represents over 300,000 UPS workers, is warning the company against crossing any contractual lines.
“If UPS wants to continue to downsize corporate management, the Teamsters won’t stand in its way,” said union president Sean O’Brien. “But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight.”
UPS spokesperson Glenn Zaccara responded by saying the company intends to fully honor its labor contract.
What About Tariffs? The Cloud of Uncertainty Lingers
While the job cuts aren't directly tied to tariffs, UPS is still feeling the heat from Trump-era tariffs, especially the 145% rate on some Chinese imports. The company says many of its clients are in a wait-and-see mode, unsure how to react.
“There’s so much uncertainty around the China orders,” said Tomé. “We know what’s been announced. We don’t know if it will actually happen or if it will stick.”
What’s Next for UPS?
UPS is forecasting a dip in revenue for the next quarter, driven by the Amazon pullback and potential ripple effects from the tariffs. Still, it’s holding off on changing its full-year outlook — for now.
“There’s so much uncertainty in the back half of the year,” Tomé noted, referring to the potential impact on U.S. consumers. “Current consumer sentiment is down... but the consumer is still pretty healthy.”
Bottom Line: A New UPS Is Taking Shape
UPS is evolving — not downsizing in despair, but recalibrating for a future with fewer packages from Amazon and more automation on the ground. Whether this transformation pays off or leads to further turbulence will be something to watch closely in the months ahead.
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