Dive Brief:
- UPS plans to cut up to 30,000 operational positions and launch another voluntary driver buyout program as it continues to adjust to fewer deliveries for Amazon, EVP and CFO Brian Dykes said on a Q4 earnings call Tuesday.
- The moves will help UPS reach a $3 billion savings target this year, according to Dykes. They build upon the company’s reduction of about 48,000 operational positions and completion of a full-time driver buyout program last year. UPS did not provide specifics on how many drivers it expects will take the upcoming offer.
- UPS will also close 24 buildings in the first half of 2026 as part of the cost reduction plan, with additional buildings to potentially close later in the year, Dykes said. The carrier closed 93 buildings last year.
Dive Insight:
UPS keeps slashing expenses to right-size its network as a planned 50% reduction in volume from major customer Amazon continues. After trimming Amazon volume by 1 million pieces per day last year, UPS expects an additional 1 million pieces to be cut in 2026, Dykes said.
The volume decline has weighed on the carrier's financial performance — in Q4, UPS' domestic revenue declined 3.2% year over year. But once the Amazon glide-down concludes in the first half of the year, results will start seeing improvement, according to Dykes.
"First-half cost pressures are expected to be behind us, and we'll be running a more agile U.S. network," the CFO said.
UPS is also expecting its renewed Ground Saver agreement with the U.S. Postal Service to strengthen its financial performance. Through the deal, UPS is handing off some Ground Saver packages to the agency for final-mile delivery.
"Our new agreement improves the economics associated with this product while ensuring our service expectations are met," CEO Carol Tomé said during the call. "Ramp up has already begun, and over the next several weeks and months, we will continue to increase the flow of Ground Saver volume to the USPS."
