The largest courier business in the world intends to fire thousands of employees following a poor quarter-end result. For the final three months of 2023, United Parcel Service (UPS) reported a decrease in shipping volume. It has now unveiled a $1 billion cost-cutting plan that will result in job losses for a large number of Americans.
What’s Wrong At UPS?
riginally called the American Messenger Company, it was established in Seattle in 1907 and focused on delivering packages for retail establishments. In 1919, the company renamed itself as United Parcel Service and began operations in California. By 1975, it was operating in all 48 contiguous states. These days, it employs over 500,000 people and ships to every country in the world.
UPS, however, isn’t doing as well as one might anticipate in spite of the enormous spike in package deliveries brought forth by online markets. The company’s performance results for the last quarter of 2023 were highly poor, and they were disclosed on January 30. UPS only generated $1.61 billion in net revenue during the quarter, which is less than half of the $3.45 billion it made during the same period in 2022. 2023 was dubbed “a unique, and quite frankly, difficult and disappointing year” by CEO Carol Tomé. The daily parcel volume was down 8.3% globally and 7.4% in the US, she continued, with Europe bearing the brunt of the global decline.
A staff strike that was being threatened contributed to the company’s downfall by convincing many clients to use other couriers for their deliveries. UPS and the Teamsters Union were embroiled in a protracted legal battle for several months, which was settled in August of last year with a wage rise. However, the labor cost increase associated with the settlement probably contributed to the decline in revenue.
UPS Is Cutting Costs –- And Jobs
In reaction to the economic slump, the corporation decided to save $1 billion, primarily through the layoff of 12,000 workers. Additionally, employees will be required to return to working five days a week in an effort to counteract the post-pandemic decline in productivity brought on by hybrid working.
Tomé said UPS is also thinking at selling off Coyote, its truck brokerage business, which has “volatile” revenues, or frequently turns a loss. Although the company’s earnings may somewhat increase as a result, UPS primarily wants to restore its financial stability through employment layoffs. Although it could be excellent news for the business, 12,000 American workers will take a severe hit as a result.
