UPS to Trim Workforce to Reduce Amazon Deliveries: What Lies Ahead?

In 2025, United Parcel Service’s UPS management had reached an agreement in principle with Amazon. com AMZN to reduce the e-commerce giant’s volume by more than 50% by June 2026. CEO Carol Tome noted that Amazon was not the company’s most profitable customer. The reduction in volumes is compelling UPS to right-size its network.

UPS has shifted its focus to higher-margin areas such as small and medium-sized businesses and healthcare logistics from low-margin volumes like Amazon. As part of the restructuring and cost-cutting efforts, UPS announced on the fourth-quarter 2025 conference call yesterday that it would eliminate up to 30,000 operational jobs and close multiple facilities by 2026. This move aims to reduce reliance on Amazon deliveries and pivot toward more profitable business endeavors.

Per UPS’ CFO, Brian Dykes said it aims reduce about 25 million total operational work hours in 2026 because Amazon shipments are declining. Outlining the details of the job-cut plan, Dykes said that job losses will occur through attrition and a second voluntary exit program to be offered by UPS for full-time drivers.

UPS, which closed 93 buildings in 2025, has already selected 24 buildings for closure. These buildings will close in the first half of 2026. More buildings are likely to be closed later in the year. The company aims to deploy more automation across the network to trim costs and improve efficiency. These measures are expected to help UPS to achieve $3 billion in savings related to the Amazon glide-down.

UPS’ competitor FedEx FDX is also implementing cost-cutting measures to address the soft demand environment and improve operations through its Network 2.0 initiative. A few years back, FedEx introduced DRIVE, a broad program aimed at enhancing long-term profitability.

DRIVE generated $1.8 billion in permanent savings in fiscal 2024 and delivered an additional $2.2 billion in cost savings in fiscal 2025. These efforts include lowering flight frequencies, parking aircraft and reducing headcount. For fiscal 2026, FedEx’s management expects to achieve $1 billion in transformation-related savings through initiatives such as DRIVE and Network 2.0.

UPS’ Price Performance, Valuation & Estimates

Shares of UPS have declined in excess of 19% in a year, underperforming its industry.

1-Year Price Comparison

From a valuation standpoint, UPS trades at a 12-month forward price-to-sales ratio of 1.03X, below industrial levels.

UPS trades at a discount relative to industrial levels, in terms of the 12-month forward price-to-earnings ratio as well.

For UPS, the 2026 earnings estimate has remained stable at $7.33 per share.

UPS’ Zacks Rank

UPS currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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