ATLANTA – Shipping giant UPS announced this week that it will cut 12,000 jobs as part of a major cost cutting initiative.
In an earnings report released this week, the parcel shipper recorded $24.9 billion in consolidated fourth quarter revenue, a 7.8% decline from last year’s $27 billion. Operating profit fell 22.5% to $2.5 billion, and net income fell to $1.61 billion from $3.45 billion.
After an earnings call Tuesday, shares dipped more than 8%.
“2023 was a unique and, quite candidly, difficult and disappointing year. We experienced declines in volume, revenue and operating profits and all three of our business segments,” CEO Carol Tomé said in the call.
Tomé said the job cuts are part of a strategy to save $1 billion in costs. Most of the layoffs will be managers and contractor positions.
As of the end of last year, the company employed about 495,000 people. The layoffs, while significant, affect less than 3% of its workforce.
UPS struggled with the threat of a Teamsters strike last year, which shifted some business to competing shippers like FedEx. The company expects to get all of that business back, but it has so far gotten back just 60% of it. The latest round of layoffs will not affect unionized employees, the company said.
UPS expects the first half of 2024 to be challenging, with the first quarter representing more of an obstacle. It expects revenue and margins to stabilize as the year progresses but does not expect significant year-over-year gains in either.
Even if volumes recover, which fell a daily average of 7.4% for the quarter, cut jobs won’t be re-added, the company said.