UPS announced that it intends to eliminate 12,000 jobs in an attempt to save $1 billion, CNN reported. The courier industry giant said that most of the layoffs will affect managerial positions and suppliers.
The job cuts come after UPS released disappointing sales forecasts for this year, with the company expecting global revenues of $92 billion to $94.5 billion. That would be an increase from the $91 billion in revenue the company reported in 2023, but analysts polled by Refinitiv expected revenue of at least $95.6 billion, CNN pointed out.
UPS is to lay off 12,000 people
The American website reported that UPS lost money last year as customers concerned about a possible Teamsters strike moved shipments to competing carriers such as FedEx. While UPS says it expects to recover most of that business, it has only recovered about 60%. lost business.
UPS’s business surged to record levels in the first three years of the pandemic as online shopping exploded. In 2022, the company’s sales exceeded $100 billion for the first time. The fact that revenues in 2023 decreased by over 9%. and won’t reach that level again in the near future is “frankly challenging and disappointing,” CEO Carol Tome said on a conference call with investors Tuesday.
“Some of these results were due to the macroeconomic environment and some were due to disruptions related to our labor contract negotiations, as well as higher costs related to the new contract,” Tome said.
UPS shares fell about 7 percent on Tuesday.
About half a million employees
UPS’s employment has grown as its business has grown rapidly to about 540,000. The company reduced its workforce to about 495,000 late last year through job cuts and hours rather than layoffs.
However, the company forecasts that the overall small package market in USA, excluding Amazon, will grow by less than 1%. in 2024. The company also faces a 12.1% an increase in union wage rates, which is fueling its efforts to cut other costs. And reducing salaried staff is a major part of its cost-cutting efforts.
UPS says it employs about 85,000 managers as part of a global workforce of nearly 500,000 employees. UPS employs more than 300,000 hourly workers represented by the Teamsters union.
Planned layoffs of 12,000 people constitute approximately 2.5 percent. the company’s global workforce, which has already shrunk since the pandemic, when a surge in online shopping sparked a business boom.
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