UPS Cuts 34,000 Positions and Closes 93 Facilities in 2025 Amid Amazon Volume Decline
UPS Cuts 34,000 Positions and Closes 93 Facilities in 2025 Amid Amazon Volume Decline
United Parcel Service (UPS) is undertaking its most comprehensive restructuring in company history during 2025, reducing approximately 34,000 positions and closing 93 facilities. The company's third-quarter financial report revealed that these measures are planned in parallel with declining Amazon volumes and optimization of the U.S. distribution network.
Workforce reduction and driver program
The most significant step in UPS's employment downsizing has been the voluntary separation program for full-time drivers (buyout program). CFO Brian Dykes noted that approximately 90 percent of departing drivers had left their positions at the company as of August 31. The program is reported to have cost UPS 175 million dollars.
CEO Carol Tomé characterized the driver buyout program as "successful" but did not disclose a specific number of participating drivers.
UPS has achieved 2.2 billion dollars in savings through these reduction measures by the third quarter of 2025 and is targeting total cost reductions of 3.5 billion dollars by year-end. Dykes stated, "We are still in the process of identifying other facilities that could be closed."
Steep decline in Amazon volume
The primary driver of UPS's strategic transformation is the reduction in service volume provided to Amazon. The company plans to reduce package deliveries received from Amazon by 50 percent by June 2026.
According to third-quarter results, UPS's Amazon volume declined 21.2 percent year-over-year. This drop has prompted UPS to narrow its U.S. operations network to balance capacity.
CFO Dykes noted that the relationship with Amazon will not end completely, stating:
"Amazon will continue to be a major customer for us. There are many areas where we can add value to their supply chain — returns management, inbound transportation, and integration with small business sellers on their platform."
Operational transformation and automation investments
UPS is positioning its network restructuring not merely as downsizing but as efficiency-focused transformation. Over the past year, the company has deployed new automation systems across 35 facilities.
CEO Carol Tomé stated that with these systems in place, UPS expects 66 percent of package volume to flow through automated processes in the final quarter of 2025, compared to 63 percent in the same period last year.
Through these automation investments, UPS aims to reduce costs while maintaining operational speed and service quality. Tomé remarked, "As we enter peak season this year, we will leverage our proven technologies and scale advantages in the most efficient manner possible. Our goal is to manage the most efficient peak season in UPS history."
Company's overall position
UPS's restructuring strategy has become necessary due to sluggish e-commerce growth in the United States and reshaped contracts with major customers. The company had previously intensified efforts to reduce dependence on Amazon by building a diversified customer portfolio that includes retailers, healthcare providers, and small businesses.
UPS is also prioritizing digitalization investments such as automated sorting, route optimization, and data-driven capacity planning to maintain profitability despite declining volumes.
According to industry experts, UPS's ability to reduce Amazon dependence while sustaining profitability will depend on the pace of its digital transformation and the productivity gains delivered by automation.
Key Points:
UPS laid off 34,000 employees and closed 93 facilities in 2025.
Driver buyout program achieved 90 percent participation rate at a cost of 175 million dollars.
Amazon volume fell 21.2 percent; plan to reduce by 50 percent by 2026 remains on track.
Total cost savings target: 3.5 billion dollars.
UPS deployed new automation systems at 35 facilities; 66 percent of volume will be automatically processed in Q4.
CEO Carol Tomé: "We are targeting the most efficient peak season in our history."
Strategic focus: profitability, automation, customer diversification, and operational flexibility.
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News Link: https://www.supplychaindive.com/news/ups-layoffs-driver-buyouts-q3-2025/803945/
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Author: SedatOnat.com
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