On January 31, 2024, UPS disclosed plans to cut 12,000 jobs over the year, attributing the decision to a challenging 2023 marked by a disappointing performance and a summer strike that drove away key clients. Another significant factor was the new contract with the Teamsters union, which includes wage increases. The company estimates that the workforce reduction, representing 2.5% of its total employees, will decrease costs by approximately one billion dollars annually.
The majority of the job cuts are expected to occur at the managerial level, with reductions in external suppliers as well. This downsizing, expected to be permanent, signifies a shift in the company's operational approach, with a particular emphasis on leveraging artificial intelligence. The restructuring might also involve the sale of Coyote, the American truckload brokerage firm acquired in 2015.
In the fourth quarter of 2023, UPS experienced a 7.8% decline in revenue compared to the same period the previous year, amounting to $24.9 billion, with a consolidated operating profit of $2.5 billion, a decrease of 22.5% (27.1% on an adjusted basis). Revenue reductions were noted across all segments: U.S. domestic revenue fell by 7.3% to $16.915 billion, international by 6.9% to $4.606 billion, and supply chain by 11.4% to $3.396 billion. For the entire year of 2023, revenues were $91 billion, marking a 9.3% decrease from 2022, with an operating profit of $9.1 billion—a 28.7% drop.
For the full year of 2024, UPS forecasts revenues to be between $92 billion and $94.5 billion, with an adjusted consolidated operating margin ranging from 10.0% to 10.6%. The company anticipates capital expenditures of approximately $4.5 billion and dividend payments of around $5.4 billion.
