(RepublicanJournal.org) – The world’s largest courier company plans to shed thousands of jobs after showing a disappointing performance in the last quarter. United Parcel Service (UPS) reported a fall in shipping volume for the last three months of 2023. Now, it’s announced a $1 billion cost-savings package that will put many Americans out of work.
What’s Wrong At UPS?
UPS is one of the giants of the courier industry. Founded in Seattle in 1907, it started out as the American Messenger Company and specialized in delivering parcels for retail stores. The operation changed its name to United Parcel Service in 1919, at the same time as it expanded its business to California, and by 1975 operated throughout all 48 contiguous states. Now, it delivers worldwide and employs more than half a million people.
However, despite the vast increase in parcel deliveries created by online marketplaces, UPS isn’t thriving the way one might expect. On January 30, the company released its performance figures for the final quarter of 2023, and they were very disappointing. Over the quarter, UPS brought in net revenue of only $1.61 billion, less than half the $3.45 billion it earned in the same period of 2022. CEO Carol Tomé called 2023 “a unique, and quite candidly, difficult and disappointing year.” She added that daily parcel volume was down 7.4% in the US and 8.3% worldwide, with the global decrease “heavily weighted” towards Europe.
Another factor in the company’s decline was a threatened staff strike, which persuaded many customers to switch their deliveries to other couriers. UPS spent several months locked in a dispute with the Teamsters Union, which was resolved last August with an agreement to boost wages, but that deal also increased labor costs –- and that’s likely to have impacted the fall in revenue.
UPS Is Cutting Costs –- And Jobs
The company’s response to the downturn is to make $1 billion in savings, mostly by letting 12,000 employees go. Staff will also be ordered to go back to spending five days a week in the office in an attempt to reverse the post-pandemic fall in productivity caused by hybrid working.
Tomé said UPS is also considering selling off its truck brokerage business, Coyote, which has “volatile” earnings –- in other words, it often makes a loss. That might improve the company’s bottom line a little, but the job cuts are the core of UPS’s hopes of restoring its financial health. That might be good news for the company, but it’s a crushing blow to 12,000 American workers.
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