Why Logistics Giant UPS is Cutting 34,000 Jobs

UPS is set to cut tens of thousands of jobs as part of a major company-wide restructure.

The decision to dramatically reduce its workforce was included in an announcement on the logistics giant's Q3 earnings for 2025, where it detailed consolidated revenues of US$21.4bn.

Detailing its bid enhance efficiency through automation, UPS stated: "Our transformation strategy activities have spanned several years and are designed to fundamentally change the spans and layers of our organisation structure, processes, technologies and the composition of our business portfolio.

"Our transformation strategy includes initiatives within our Transformation 2.0, Fit to Serve and Network Reconfiguration and Efficiency Reimagined programmes.

"Various circumstances precipitated these initiatives, including identification and prioritisation of certain investments, developments and changes in competitive landscapes, inflationary pressures, consumer behaviours and other factors including post-COVID normalisation and volume diversions attributed to our 2023 labour negotiations."

UPS said it was taking steps to implement a series of technologies aimed at:

• Increasing operational efficiency
• Reducing global indirect operating costs
• Increasing visibility
• Introducing time and pay systems
• Reducing reliance on legacy systems

In January 2025, the company disclosed the beginnings of a Network Reconfiguration strategy for 2025-2027. It warned of the closure of up to 10% of its buildings, the reduction of vehicle and aircraft fleets and a smaller workforce.

Efficiency initiatives

UPS is overhauling operations through its Network of the Future initiative, which consolidates sorting and expands automation.

In addition, the Network Reconfiguration initiative is redesigning the network end to end, while Efficiency Reimagined aligns organisational processes to the new model.

Since January 2025, UPS has reduced its operational workforce by about 34,000 roles and ceased daily operations at 93 owned and leased sites, with further closures under review.

Carol B. Tomé, CEO at UPS, comments: "We are executing the most significant strategic shift in our company’s history, and the changes we are implementing are designed to deliver long-term value for all stakeholders.

"With the holiday shipping season nearly upon us, we are positioned to run the most efficient peak in our history while providing industry-leading service to our customers for the eighth consecutive year."

Through the aforementioned building closures and job cuts, UPS has achieved cost savings of around US$2.2bn. It expects to achieve US$3.5bn year-on-year cost savings in 2025 as a result.

Company savings

The Q3 report also details costs linked to these initiatives.

UPS expects to exclude US$400m-$650m from 2025 adjusted (non-GAAP) expenses. The company says the amount relates to third-party consulting fees, employee separation benefits and programme expenses.

As of 30 September, incurred programme costs total US$422m, including US$387m year to date, and are expected to rise if UPS closes more buildings.

Despite this, UPS leadership views the Q3 results positively.

"As we've gone through the quarter, we are seeing some of the best production metrics that we've seen..." says Brian Dykes, Chief Financial Officer at UPS.

"The investments that we're making in automation that we're deploying through Network of the Future are certainly showing benefits that we're seeing that are coming through.

"We executed on our driver voluntary severance programme in the quarter. About 90% of those drivers exited on 31 August, so those savings will start to materialise in the fourth quarter."

While Brian and Carol view staff cuts and building closures as financial necessities, the wider supply chain impact cannot be underestimated.

The restructure sees UPS shift from labour-intensive operations to automated systems, cutting headcount to lower costs.

But the strategy carries a wider risk: if sustained savings materialise, peers may follow, accelerating technology-driven displacement across the sector.

UPS says efficiency has already improved after removing 34,000 roles, but stakeholders will watch to see whether those gains endure over time.