UPS to Cut 20,000 Jobs Amid Automation and Labor Costs—Not Tariffs
UPS has announced plans to cut approximately 20,000 jobs in 2024, representing about 4% of its global workforce. While some might speculate that tariffs or trade policy are to blame, the company clarified that these cuts are primarily the result of automation and a broader restructuring strategy—particularly a reduction in its Amazon business.
Automation, Not Tariffs, Driving Cuts
The rise of automation continues to reshape logistics. UPS revealed it will be increasing the use of automated systems in over 400 facilities. These systems will handle tasks ranging from package sorting and label application to truck loading and unloading—directly reducing the need for manual labor.
UPS CEO Carol Tomé emphasized that these changes are necessary to streamline operations and reduce long-term costs. “With this reconfiguration, we will also lessen our dependency on labor,” she stated.
The Impact of Rising Labor Costs
While the company cited technology as a key driver, labor costs appear to be a significant underlying factor. Full-time UPS drivers can earn up to $170,000 per year in salary and benefits, while part-time drivers make at least $25.75 an hour. These wages, largely negotiated through the Teamsters union, are among the highest in the delivery industry.
Unlike the public sector—where wage increases are often funded through deficit spending—private companies like UPS operate on thin margins and must remain profitable to satisfy investors and lenders. If a private firm is viewed as financially unstable, funding quickly dries up. This financial pressure creates an environment where high wages must be balanced with operational efficiency, often through job cuts or automation.
This dynamic is reminiscent of rent control policies: those who secured benefits early (such as current employees) are protected, while new entrants (future workers) face stricter conditions. UPS seems committed to honoring its existing contracts but is clearly signaling a leaner approach to future hiring.
Union Pushback
The International Brotherhood of Teamsters, which represents more than 300,000 UPS hourly workers, responded forcefully. “If UPS wants to continue to downsize corporate management, the Teamsters won’t stand in its way,” said President Sean O’Brien. “But if the company intends to violate our contract or makes any attempt to go after hard-fought, good-paying Teamsters jobs, UPS will be in for a hell of a fight.”
UPS spokesperson Glenn Zaccara assured the public that the company intends to uphold all contractual obligations with the union.
Retreat from Amazon and Uncertain Trade Outlook
UPS is also in the process of reducing its dependence on Amazon, once its largest customer. In January, the company announced a “glide down” plan to cut Amazon-related business in half by mid-2026. Tomé explained that much of that volume was unprofitable and not a good fit for UPS’s delivery network. The company will close 73 U.S. buildings by the end of June as part of this transition.
As for tariffs, UPS noted that while it experienced some impact—especially from the 145% tariffs on certain Chinese imports—it’s not the driving force behind the current restructuring. Many customers are taking a “wait and see” approach regarding China, with hopes of a tariff rollback, but there’s little certainty on what will ultimately unfold.
“There’s so much uncertainty around the China orders,” Tomé said. “We know what’s been announced. We don’t know if it will happen, or if it will stick.”
A Cautious Outlook
Given the pullback from Amazon and potential tariff impacts, UPS expects its revenue to fall in the second quarter compared to last year. Although it hasn’t revised its full-year forecast yet, the company acknowledged that it may do so depending on consumer sentiment and global trade conditions.
“There’s so much uncertainty in the back half of the year,” Tomé added. “But the consumer is still pretty healthy.”