UPS to cut 12,000 jobs as revenue outlook falls short on weak parcel demand

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UPS announced it would cut 12,000 jobs in an effort to save $1bn just months after agreeing a costly pay deal with its Teamsters union and as weak demand for its delivery services underpinned a soft annual revenue outlook.

The delivery company said on Tuesday the headcount reductions would target its 85,000 workers in management, along with some contractors, with three-quarters of the lay-offs expected to occur in the first half of the year. UPS, which employs 495,000 workers worldwide, does not expect these jobs to come back.

Describing the job cut as being about a “new way of working” chief executive Carol Tomé also confirmed the company was returning to a policy of employees coming to the office five days a week.

UPS in July reached a pay deal with the Teamsters, which represents 340,000 of its employees, that resulted in a 12.1 per cent increase in union wage rates. The agreement helped avert a potential strike, which threatened to cause economic chaos by stranding more than a quarter of all parcels in the US, but the company cut its financial guidance several times over subsequent months and warned the deal would weigh on revenue and margins.

Often regarded as a bellwether for the global economy owing to the breadth of packages and documents it ships, UPS said on Tuesday it now expected revenues in a range between $92bn and $94.5bn in 2024, below Wall Street forecasts for $95.6bn. Its revenue in 2023 was $91bn, a 9.3 per cent drop from 2022.

“2023 was a unique and, quite candidly, a difficult and disappointing year,” Tomé told analysts on Tuesday. “Some of this performance was due to the macro environment, and some of it was due to the disruption associated with our labour contract negotiations, as well as higher costs associated with the new contract.”

Chief financial officer Brian Newman said that the macroeconomic…