UPS to cut 20,000 jobs on slashed Amazon deliveries as US tariffs weigh
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The move comes as President Trump’s aggressive trade policies have begun slowing economic growth and increasing expectations for a possible recession.
PHOTO: REUTERS
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Los Angeles – United Parcel Service (UPS) said on April 29 it would slash 20,000 jobs and shut 73 facilities as part of a planned reduction in deliveries for Amazon.com, and amid US President Donald Trump’s tariffs that are roiling global trade.
A UPS spokesperson said the layoffs are due to the shedding of 50 per cent of shipping volume from Amazon.com, its largest customer, as well as ongoing cost-cutting and efficiency projects under a major operational restructuring.
An Amazon spokesperson said: “Due to their operational needs, UPS requested a reduction in volume and we certainly respect their decision.”
UPS also faces a sharp downturn in volume from China-linked bargain e-commerce sellers Temu and Shein because the US plans in May to end duty-free status for most of their packages coming to the United States. Temu is already tacking on an import charge at checkout, while Shein has added the tariffs to the price of goods.
The move comes as Mr Trump’s aggressive trade policies have begun slowing economic growth and increasing expectations for a possible recession.
UPS is contractually obligated to create 30,000 jobs under its current national master agreement with Teamsters, the union’s general president Sean O’Brien said.
“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, in response, told Reuters that it plans to adhere to its contract. The company has a US workforce of 406,000, with more than 75 per cent of them represented by unions, according to its latest annual filing.
“The world hasn’t been faced with such enormous potential impacts to trade in more than 100 years,” chief executive Carol Tome said on the company’s earnings call.
As the world’s largest parcel delivery firm, UPS touches a broad swathe of industries and is seen as a gauge for the global economy.
FedEx, its top rival, signalled a slowdown in March.
UPS aims to shelter profits by cutting US$3.5 billion (S$4.6 billion) in 2025 with its latest overhead reductions. UPS also said a big percentage of the volume reduction from Amazon is money-losing work moving goods from fulfilment centres.
For the second quarter, UPS forecast a total-company operating margin of about 9.3 per cent – below the double-digit margins investors like.
Its largest and most important US business could see a roughly 9 per cent drop in average daily packages handled and a low single-digit percentage drop in revenue.
Earlier in April, President Trump slapped new 145 per cent tariffs on many Chinese goods – escalating the stand-off between the world’s two largest economies.
The China to US trade lanes are the most profitable for UPS and accounted for about 11 per cent of UPS international revenue in 2024, Ms Tome said.
UPS is already seeing an uptick in volume from Europe and other Asian countries including Vietnam and Thailand, UPS executives said.
Still, China is the factory of the world. If Mr Trump’s hefty China tariffs stick, fully replacing trade with China will take years.
Mr Trump’s current China tariffs could further slow already sluggish shipments between businesses.
The small and medium-sized businesses that UPS has targeted to offset that weakness could also get hit particularly hard, since some of them source 100 per cent of the goods they need from China, Ms Tome said.
UPS is also reliant on deliveries for retailers, many of whom are heavily reliant on China.
Amazon itself sources from China, and 40 per cent or more of the online retailer’s marketplace sellers are based in that country. If US consumers buy fewer goods from Amazon because tariffs make prices too high, UPS would suffer.
Meanwhile, UPS and its retail customers have started planning for the vital peak winter holiday season, when daily deliveries can more than double.
In the best-case scenario, the US and China will soon come to an agreement that normalises trade, UPS executives said.
In the worst case, the tariff fight continues, resulting in a supply shock, chief financial officer Brian Dykes said. REUTERS
