United Parcel Service (UPS, Financials) said Tuesday it will eliminate 20,000 jobs and shutter 73 facilities after losing half its shipping volume from Amazon (AMZN, Financials), citing cost pressures and tariff-related slowdowns.
UPS said it aims to save $3.5 billion in 2025 by slashing overhead. The company forecast a 9.3% operating margin for the second quarter, falling below double-digit levels sought by investors. Shares slipped 0.3% in early trading.
The restructuring follows UPS's decision to drop 50% of its volume from Amazon, its largest client. UPS also cited weakening demand from China-based sellers such as Temu (PDD, Financials) and Shein, especially with new U.S. tariffs and the end of duty-free treatment set to begin in May.
CEO Carol Tome said the global trade disruption could be the largest in over a century. CFO Brian Dykes added that extended tariff policies could trigger a supply shock.
UPS is a bellwether for global commerce. The move signals deeper trade risks tied to President Trump's 145% tariffs on Chinese imports. UPS's China-to-U.S. shipments made up 11% of its international revenue last year, and executives say sourcing alternatives will take years to ramp up.
Investors should monitor Q2 earnings and the upcoming peak holiday season, where shipping volumes often double and trade friction could strain fulfillment.
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