United Parcel Service (UPS) disclosed on Tuesday, when it released its earnings report, that the company had eliminated 48,000 management and operational positions. Among these, 14,000 were management roles, and 34,000 were operational roles. The company stated that these reductions were achieved through layoffs and voluntary separation packages (buyouts).

The scale of this round of layoffs exceeded UPS’s previously announced plans. In April this year, UPS stated that it would cut approximately 20,000 operational jobs to restructure its U.S. network, expecting to save around USD 1 billion in costs; in January 2024, UPS announced plans to eliminate approximately 12,000 management positions.

UPS stated that it is well-positioned to prepare for the upcoming holiday peak season; cost-saving measures implemented this year have already resulted in approximately USD 2.2 billion in savings. The company has also benefited from increased automation and plans to reduce temporary hiring during the fall and holiday seasons.

Although UPS’s third-quarter profit and revenue declined year-over-year, its performance exceeded market expectations, thanks to its cost-cutting and job reductions, which drove the company’s stock price up nearly 7% during midday trading on the U.S. stock market on Tuesday.

UPS Chief Executive Officer Carol Tomé stated:

We continue to identify opportunities to reduce costs. We are well-prepared to execute the most efficient peak season operations in the company’s history.

Tomé faces pressure to reverse the prolonged slump in the company’s stock price. Particularly significant pressure comes from employees and retirees. Due to UPS’s unique shareholder structure, they hold considerable influence over corporate affairs. Earlier media reports indicated that this group significantly impacts management decisions.

Tomé is the first externally appointed CEO in UPS’s history. She previously served as the Chief Financial Officer of Home Depot and was a long-time board member of UPS. She took over as CEO during the COVID-19 pandemic, shifting the company’s business model from pursuing volume growth to focusing on high-margin packages.

UPS Chief Financial Officer Brian Dykes noted:

We need less variable capacity, fewer leased aircraft, fewer rental cars, and fewer seasonal employees. This allows us to operate a more efficient network.

This personnel optimization at United Parcel Service (UPS) follows the company’s decision to reduce business volume from Amazon, which was UPS’s largest customer at the time. In the third quarter, UPS’s Amazon-related business volume fell by 21.2%. UPS expects that the average daily package volume during this year’s peak season will be lower than last year’s, primarily due to the company’s ongoing reduction in shipments from Amazon.

As part of its cost-saving plan, UPS has closed 93 owned and leased daily operational buildings by 2025 and anticipates achieving approximately $3.5 billion in year-over-year cost savings for the full year. Tomé added that UPS expects Amazon-related business volume to continue declining, with further facility closures anticipated throughout the year.

The announcements of layoffs by UPS and Amazon came one after another. As the second-largest employer in the United States, Amazon is initiating the largest round of layoffs in its corporate history, affecting not only 10% of its white-collar workforce but also potentially placing hundreds of thousands of blue-collar jobs at risk. According to media reports:

The ultimate goal of Amazon’s robotics team is to achieve 75% operational automation. This initiative is expected to avoid adding over 600,000 employees even as sales double by 2033, while saving approximately 160,000 recruitment needs by 2027, potentially causing significant impacts on blue-collar jobs.