UPS to cut 12,000 jobs on weak e-commerce demand

United Parcel Service said today it would cut 12,000 jobs and explore strategic options for Coyote, its truckload freight brokerage business, after the company forecast full-year 2024 revenue below estimates.

“The small package market in the US, excluding Amazon is expected to grow by less than 1%”, CEO Carol Tome said in a post-earnings call with analysts.

Reuters reported in October that US retailers and other delivery customers were winning discounts from UPS and rival FedEx as they seek to fill trucks amid shrinking demand.

UPS, seen as a bellwether for the US economy, expects full-year 2024 revenue in the range of $92 billion to $94.5 billion, below analysts’ estimates of $95.57 billion, according to LSEG data.

Meanwhile, customers shifting to less lucrative ground-based delivery from air-based services is also piling pressure on both UPS and FedEx.

For the fourth quarter, UPS reported a 6.9% decline in revenue from its international segment due to volume softness in Europe and 7.3% decline from its domestic segment.

The two segments accounted for about 86% of the company’s revenue in 2023, and have declined for the last four and five quarters, respectively.

The company reported quarterly revenue of $24.9 billion, down from $27 billion a year earlier and below analysts’ estimates of $25.43 billion.

Labour contract-related costs in the second half of 2023 were expected to be about $500m more than the company’s estimates, Chief Financial Officer Brian Newman had previously said.

Adjusted profit fell to $2.47 per share from $3.62 a year earlier, but came in slightly above analysts’ estimates of $2.46 per share.