The American courier and parcel delivery group UPS will cut 12,000 jobs, a decision linked to the slowdown in its activity but also to the accelerated use of automation (GETTY/AFP/Archives/JUSTIN SULLIVAN)
The American courier and parcel delivery group UPS will cut 12,000 jobs, its general director, Carol Tomé, announced on Tuesday, a decision linked to the slowdown in its activity, but also to the accelerated use of automation.
This social plan, which affects the entire company globally, will lead to the departure of around 2% of the company’s workforce, which has around 500,000 employees.
It will enable savings of a billion dollars in 2024, Ms. Tomé said during the conference call to present the results.
“In 2023, the economic situation and external conditions (to the group) resulted in lower volumes and a drop in turnover of 9 billion dollars year-on-year,” explained UPS in a statement sent to the AFP.
“As a result, UPS today announced a workforce adjustment plan that will result in the elimination of approximately 12,000 positions worldwide over the coming months,” the company continued.
In the fourth quarter, revenue at United Parcel Service, its full name, fell 7.8% year-over-year to $24.9 billion.
“2023 was a unique and difficult year,” summarized Ms. Tomé.
Flows are down in all UPS business segments, with the United States and air deliveries being particularly affected.
CFRA’s Stewart Glickman noted that volumes had recovered somewhat in December, “but it does not appear that we are close to a return to growth. The consumer remains under pressure.”
The analyst recalled that, at the same time, the company was facing an increase in its costs following the conclusion of a new collective agreement, in August, with the powerful American truckers’ union (International Brotherhood of Teamsters). .
The new agreement provided for an increase in hourly wages of $2.75 on average from 2023, and of $7.5 over the life of the agreement, i.e. five years.
“If you combine those two things, that’s a lot of adverse factors to absorb,” Glickman said.
– Change of methods –
Carol Tomé explained that this resizing of the workforce was the result of a reorganization of the group and not only the consequence of the slowdown in its activity in recent months.
“It’s a change in the way we work,” said the executive director. “So once volumes increase, we don’t anticipate reinstating those positions.”
UPS General Manager Carol Tomé on November 8, 2023 in Washington (GETTY/AFP/Archives/Kevin Dietsch)
UPS has initiated a massive program to automate its mail and package processing centers. In particular, he created a site called UPS Velocity, in Louisville (Kentucky), where part of the operations are carried out by some 700 robots.
For Stewart Glicklman, automation of operations was already underway at UPS, “and artificial intelligence is strengthening it.”
The movement explains, in part, that the group managed to reduce its costs in the fourth quarter (-2.9%), despite the entry into force of the new collective agreement.
The market reacted badly to the unpleasant surprise of fourth quarter turnover, significantly lower than analysts’ expectations. Around 7:00 p.m. GMT, the stock lost 7.05% on the New York Stock Exchange.
Net profit stood at $1.6 billion, divided by more than two (-53%) over one year.
One of UPS’s main competitors, FedEx, cut some 29,000 jobs during its 2023 fiscal year, which ended at the end of May.
The third major player in the American market, DHL has also made layoffs, but in significantly smaller proportions than its two rivals.
Parcel and mail transport companies have been facing a reduction in flows since the end of 2022, after an outbreak during the coronavirus pandemic.
© 2024 AFP
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