United Parcel Service (UPS) on Tuesday reported stronger-than-expected first-quarter earnings, but the delivery giant announced plans to cut 20,000 jobs and shutter dozens of facilities in response to a rapidly evolving business environment, marked by a downturn in shipments from major customers and the chilling effects of U.S. trade tariffs.
The Atlanta-based company said it expects to save $3.5 billion in 2025 from the planned cuts and the closure of 73 leased and owned buildings by the end of June. Shares rose nearly 2% in pre-market trading on the news, with investors appearing to favor the aggressive cost-cutting despite signals of deeper structural weakness in volume trends.
Profit Beats, But Guidance Pulled
For the first quarter, UPS posted revenue of $21.5 billion, slightly above analyst estimates of $21.05 billion, and adjusted earnings per share (EPS) of $1.49, beating expectations of $1.38. The company’s U.S. domestic revenue rose 1.4% to $14.46 billion, driven by higher air cargo revenue and improved revenue per piece, even as overall parcel volume declined.
Despite the earnings beat, UPS withdrew its full-year guidance, citing macroeconomic uncertainty and tariff-driven volatility in international trade. “The actions we are taking to reconfigure our network and reduce cost across our business could not be timelier,” said CEO Carol Tomé in a statement.
Amazon and Tariffs Drive Strategic Shift
A central factor behind the restructuring is a sharp pullback in package volumes from Amazon, UPS’s largest customer, which accounted for nearly 12% of revenue in 2024. The company previously signaled its intent to reduce its Amazon exposure and has since accelerated plans to eliminate millions of Amazon deliveries from its network.
The job cuts also come amid broader challenges linked to President Donald Trump’s renewed tariff policy, which has slowed global trade flows and increased pressure on logistics operators to streamline operations. The administration’s new trade rules — including the end of duty-free treatment for foreign goods under $800 — are particularly affecting low-cost e-commerce players like Temu and Shein, further reducing volume across UPS’s international routes.
Automation, Consolidation in Focus
To counter falling demand and rising costs, UPS is moving aggressively toward automation and real estate consolidation. The company noted it will incur $400 million to $600 million in separation and lease-related expensesthis year but views the transformation as necessary to remain competitive.
Industry analysts reacted cautiously to the news. “The removal of 2025 guidance will likely create a wide range of outcomes that may be difficult to underwrite without greater macro clarity,” said Evercore ISI analyst Jonathan Chappell.
What’s Next: Navigating Structural Change
With UPS under pressure to adapt to a weaker e-commerce environment and tariff-induced trade disruptions, the company’s strategic overhaul marks one of the largest workforce reductions in the logistics sector in recent years. The focus will now turn to how effectively UPS can manage costs while maintaining service standards, especially in a competitive environment that includes FedEx, Amazon Logistics, and regional carriers.
The company previously forecast 2025 revenue of $89 billion and an operating margin of 10.8%, but without updated guidance, analysts will be left parsing quarterly performance data and macroeconomic signals to assess whether UPS can stabilize amid ongoing volatility.
