UPS announced that it will close 22 union‑staffed package facilities across 18 states and eliminate up to 30,000 positions as part of its Amazon‑volume glide‑down strategy. The closures are intended to trim fixed costs and improve operating margins while the company shifts focus to higher‑margin segments such as small‑and‑medium‑business and healthcare logistics.
The decision follows UPS’s “Efficiency Reimagined” initiative, which has already delivered $2.2 billion in cost savings through building closures and workforce reductions. By reducing the volume of Amazon‑related shipments, UPS aims to strengthen its revenue quality and achieve sustained margin expansion, a goal that has been highlighted in recent earnings calls.
In the context of UPS’s recent financial performance, full‑year 2025 revenue was $88.7 billion, down from $91.1 billion in 2024, reflecting the deliberate reduction of Amazon volume. The company’s non‑GAAP adjusted operating margin for 2025 was 9.8%, a slight decline from 10.2% in 2024, but management expects margin improvement as the higher‑margin mix takes hold.
CEO Carol Tomé said the changes would make UPS stronger and more nimble, while CFO Brian Dykes noted that revenue and cost structure in the back half of the year will be meaningfully different. Tomé also emphasized that 2026 will be an inflection point in executing the strategy to deliver growth and sustained margin expansion.
The closures have triggered a legal challenge from the Teamsters union, which filed a preliminary injunction alleging that the program violates the national master agreement and weakens union rights. The dispute adds uncertainty to the execution timeline and could result in additional costs if the court rules against UPS.
Analysts remain largely bullish on UPS, maintaining a “Buy” rating and a consensus price target of $116.04. The market views the cost‑saving initiative and strategic shift favorably, while the labor dispute is seen as a significant headwind that could affect short‑term execution.
The long‑term implications of the restructuring are a leaner, more agile network that can better serve higher‑margin customers. However, the legal challenge and potential work stoppages pose operational risks that could offset some of the anticipated benefits in the near term.
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