UPS Layoffs 2024: Delivery company UPS has announced plans to cut 12,000 jobs in response to economic challenges and a labor dispute that deterred customers. CEO Carol Tomé acknowledged 2023 as a challenging year, emphasizing the company’s commitment to efficiency through investments in artificial intelligence (AI). The decision to reduce staff is anticipated to save $1 billion (£790 million) this year.
Expressing disappointment in the company’s performance, Tomé highlighted the impact of a softer economy and the labor strife that affected UPS. To address these issues, UPS is embracing AI technology while implementing a return-to-office policy, requiring staff to work in-office five days a week.
The job cuts, amounting to approximately 2.5% of the global workforce, are expected to primarily affect the 85,000 management positions and some contractors. UPS executives clarified that these positions would not be reinstated even as the company anticipates a recovery from last year’s challenges.
UPS, often considered an economic barometer, faced a decline in sales and profits in 2023, attributed to reduced package volumes, economic weaknesses in Europe and Asia, and disruptions caused by a threatened strike in the US. While the company has reclaimed around 60% of the business lost during the strike, its outlook for the coming year fell short of analysts’ expectations, leading to a more than 7% drop in shares.
Furthermore, UPS cautioned that costs related to its recent contract with the Teamsters union would continue to impact the company over the next six months. As part of the agreement, full-time drivers are set to receive a pay and benefits package totaling about $170,000 (£135,000) annually by the contract’s conclusion in 2028.
Looking ahead, UPS aims to enhance productivity and is exploring the potential sale of Coyote, a truck load brokerage business acquired in 2015. Tomé expressed optimism about leveraging technological advancements, including generative AI, to drive positive changes within the company. Despite challenges such as potential shipping disruptions from conflicts in the Red Sea and drought in the Panama Canal, UPS remains focused on navigating a path to future success.