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Shipping UPS is feeling the impact of the post-pandemic downturn in shipping demand.
The company recently announced its planning to cut approximately 12,000 jobs, both full-time and part-time, across management and contract positions.
This initiative, dubbed "Fit to Serve," is expected to affect less than 3% of UPS' total workforce, which stands at around 495,000 employees. The majority of these layoffs, about 75%, are anticipated to occur in the first half of the year, aiming to save the company around $1 billion in 2024.
In addition to the workforce reduction, UPS is exploring options for its truckload brokerage business, Coyote Logistics, which may include a potential sale. Acquired in 2015 for $1.8 billion, the Chicago-based Coyote Logistics saw its revenue nearly double during the pandemic, reaching around $2 billion annually. However, the business has since experienced a considerable decline in revenue.
UPS’s 2024 outlook
UPS is bracing for a bumpy first half of the year. They're navigating a weak macro environment and grappling with higher labor costs from last year's Teamsters union contract.
But the company expects revenue and margins to stabilize through 2024 as labor costs ease and demand picks up, both in the US and internationally.
- Revenue: Aiming for $92 billion to $94.5 billion, up from $91 billion in 2023.
- Adjusted operating margins: Expected to be between 10% and 10.6%, a slight dip from 10.9% in 2023.
On the bright side, UPS reports recovering about 60% of the business lost during last summer's Temasters contract talks, and is now targeting healthcare shippers and small- to medium-sized businesses to increase volume.
