- The company will eliminate up to 30,000 jobs in 2026 as it continues to wind down its delivery partnership with Amazon.
- UPS is cutting Amazon package volumes by more than 50%, citing low profitability, despite Amazon accounting for up to 12% of the company's revenue.
- The reduced-volume agreement, effective in the second half of 2026, is expected to save UPS about $3 billion and reduce operational hours by roughly 25 million, with cuts largely achieved through attrition and voluntary separations.
- UPS has already cut tens of thousands of jobs as part of CEO Carol Tomé's turnaround strategy and is expanding automation to improve efficiency and margins.
- UPS posted better-than-expected Q4 results, lifting shares nearly 3% on Jan. 27 and signaling improved investor sentiment, though analysts maintain a "Hold" rating.
United Parcel Service (UPS) said on Jan. 27 that it plans to eliminate up to 30,000 jobs this year as the company continues to wind down its delivery partnership with Amazon.
The job cuts came after UPS announced in 2025 that it would reduce Amazon package volumes by more than 50%, citing low profitability and a strategic shift to bolster earnings. Although Amazon accounts for as much as 12% of UPS's revenue, the shipping giant has said the e-commerce company is not its most profitable customer.
The reduced-volume agreement is scheduled to take effect in the second half of 2026. UPS estimates the decision will generate approximately $3 billion in cost savings once fully implemented.
To prepare for the unwinding of the Amazon partnership, UPS plans to reduce total operational hours by about 25 million. Chief Financial Officer Brian Dykes said during an earnings call following the company's quarterly results that the workforce reductions will primarily affect operational roles.
BrightU.AI's Enoch noted that operational roles in UPS encompass a wide array of positions that ensure the smooth and efficient delivery of packages and parcels. These roles include package handlers, drivers and management personnel, each playing a crucial part in the company's mission to provide reliable and timely service to its customers.
"In terms of semi-variable costs, we expect to reduce operational positions by up to 30,000," Dykes said. "This will be accomplished through attrition, and we expect to offer a second voluntary separation program for full-time drivers." UPS is also evaluating the expanded use of automation across its delivery network as part of its broader efficiency efforts, the company said.
UPS delivers strong Q4 results as cost-cutting strategy takes hold
UPS has been in cost-cutting mode for much of the past year, a key pillar of CEO Carol Tomé's strategy to boost profitability following the end of U.S. duty-free low-value digital shipments, known as "de minimis."
In October, the company confirmed it had reduced its operational workforce by 34,000 employees and cut 14,000 management positions in 2025.
Despite the restructuring, UPS delivered stronger-than-expected financial results for the fourth quarter. Revenue reached $24.5 billion, while adjusted earnings came in at $2.38 per share, surpassing analysts' consensus estimate of $2.20.
"I want to thank UPSers across the globe for their tireless commitment to serving our customers as we delivered best-in-class service during peak for the eighth year in a row and outperformed our financial expectations in the fourth quarter," said Carol Tomé, UPS chief executive officer. "2025 was a year of considerable progress for UPS as we took action to strengthen our revenue quality and build a more agile network. Looking ahead, upon completion of the Amazon glide-down, 2026 will be an inflection point in the execution of our strategy to deliver growth and sustained margin expansion."
Investors welcomed the results and the company's progress on operational changes. UPS shares rose nearly 3% during the Jan. 27 morning trading session and are up almost 9% so far this year, trading firmly above $100. The stock's rebound reflects improving sentiment around the company, according to Chief Market Strategist Jay Woods of Freedom Capital Markets.
"UPS was one of the biggest laggards in the Transportation Average last year and lower by -25% over the last 52 weeks," Woods said. "Yet things appear to be turning around for shareholders of Big Brown."
Meanwhile, Wall Street analysts currently maintain a "Hold" rating on UPS shares, with a consensus upside price target of 1.73 percent, according to MarketBeat.
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