Domestic and International Shipment Volumes Declined in the Fourth Quarter of 2023 Compared to Last Year. The Parcel Service Provider United Parcel Service Plans to Cut About 12,000 Jobs This Year and Has Mandated Employees to Return to the Office Five Days a Week.
UPS responds to the decline in delivery volumes and prepares for potential further downturns. Most of these cuts affect full-time and part-time management positions as well as contract workers, UPS managers explained on Tuesday.
They added that the jobs are unlikely to return even if package volumes increase again. The company currently employs around 85,000 management staff. Globally, UPS has about 495,000 employees, most of whom work in the USA and are responsible for processing and transporting packages.
CEO Carol Tomé said that these cuts are part of an effort to change the company's way of working. Part of this efficiency increase is the use of artificial intelligence and other new technologies to improve operational processes, according to Tomé.
The decisions were made after the company recorded a decline in revenue in the last quarter of 2023, as both domestic and international business figures had dropped. For 2024, UPS reported a revenue of 92 to 94.5 billion US dollars, which was below analysts' forecasts.
The shares of UPS fell by more than 8% in early trading. The company expects that the growth of small package volume in the US will be below 1% this year, but it anticipates a long-term growth rate of 3%.
Atlanta-based UPS also joins a number of companies that want their employees to work in the office every weekday. Last year, this led to controversial negotiations with union representatives who raised issues of dissatisfaction among drivers and warehouse workers due to on-site work during the pandemic, while office staff could work from home.
"Regarding our corporate culture, we are a network company, not only with logistical capabilities but also with personal relationships," Tomé said in a teleconference. The recovery in 2024 is expected to be uneven for UPS.
The company reported a decline in industrial production in Europe, and although volumes of small parcels picked up on the shipping route from China to the USA towards the end of last year, it remains cautious about business prospects.
Amazon's Largest Customer Accounted for 11.8% of the Company's Revenue in 2023, More than the 11.3% in 2022. However, Managers Explained That This Was Due to Stronger Sales Declines Among Other Customers. UPS Has Been Intentionally Reducing the Volume of Amazon For Years.
Tomé said that other customers of UPS either suffered from much lower demand or had expanded their capabilities for online purchases and in-store pickups. The truckload brokerage division of UPS, Coyote Logistics, weighed on the company's revenue.
This Business Was Hard Hit by an Oversupply Due to Higher Inventory Levels and Higher Consumption of Services Than of Goods. Tomé explained that UPS is reviewing strategic alternatives for Coyote, which UPS acquired in 2015 to expand the company's portfolio. "I don't think we fully understood how cyclical this business was at the time," said Tomé.
