New job cuts at UPS are expected to affect over 12,000 roles at the company. According to CNBC, UPS CEO Carol Tome gave the announcement in a Tuesday earnings call, stating that the UPS board voted to lay off workers in an effort to save money after experiencing a multitude of obstacles that caused significant revenue losses in 2023.
Shortly after the news, UPS shares dropped nearly 9% Tuesday morning.
Wall Street had expected UPS to make over a projected $95.5 billion in 2024. Unfortunately for UPS, their 2024 projections drew below that, between $92 billion to $94.5 billion, according to AP News. UPS hopes to save $1 billion in costs.
The earnings report revealed that the UPS revenue saw a significant decline in its fourth quarter, making just $24.9 billion compared to $27 billion the previous year.
“2023 was a unique, and quite candidly, difficult and disappointing year,” said Tome. “We experienced declines in volume, revenue and operating profits and all three of our business segments.”
Despite not being directly mentioned, the contract agreement with the Teamsters Union was one of the biggest obstacles that hurt UPS financially that year, due to workers’ pay increases and necessary improvements to working conditions.
The roles mainly affected by these layoffs will be contractor and manager positions. While there isn’t a definitive date as to when it will go into effect, Tome expects these job cuts to happen in the first half of 2024.
Additionally, Tome hinted at selling UPS’ struggling truckload brokerage business Coyote Logistics. As well as mandating UPS employees to return to the office five days a week starting in 2024.
“We are going to fit our organization to our strategy and align our resources against what’s wildly important,” Tome said.
