United Parcel Service (UPS) announced plans to consolidate facilities, reduce fleet size, and implement workforce cuts in its January 30 earnings report. This move is part of a broader network reconfiguration aimed at offsetting rising costs from its 2023 union contract and boosting profitability.
According to Bloomberg, markets reacted negatively to the announcement, with UPS shares dropping and projected annual revenues falling below expectations. UPS shares have decreased by about 22% since last year and have lost half their value since early 2022.
In August 2023, Teamsters members ratified a five-year National Master Agreement with UPS, securing significant wage increases and expanded workplace protections for over 340,000 employees. Approved by 86.3% of voters—the highest approval rate for a UPS contract—this deal introduced substantial long-term financial commitments for the company. Labor leaders hailed the agreement as a benchmark for pay and protections in the logistics sector; however, it has notably impacted UPS’s cost structure through 2028, affecting margins and operational strategy.
The 2023-2028 UPS-Teamsters National Master Agreement is expected to drive a 3.3% compound annual growth rate in wage and benefit costs over its five-year term, according to Reuters. In the second half of 2023, UPS incurred approximately $500 million in unexpected contract-related expenses, surpassing initial forecasts. These higher labor costs have pressured the company’s financial performance, with Q2 2024 adjusted earnings of $1.79 per share falling short of analyst expectations of $1.99 due to weak package delivery demand and increased labor expenses.
In March 2024, UPS revealed plans to close or consolidate 200 U.S. facilities as part of its "Network of the Future" initiative, including 63 sites slated for major automation projects to create a more efficient network less dependent on labor. Last year, the company had already announced similar plans; in January 2025, UPS confirmed temporary closures at several U.S. facilities affecting over 1,600 employees in Maryland, California, Colorado, Oklahoma, and Oregon.
Rank-and-file criticism has grown against Teamsters union leadership. Workers accused leaders of "deliberately concealing" UPS’s automation plans to secure passage of the 2023 contract, according to WSWS (World Socialist Web Site). The UPS Workers Rank-and-File Committee warned of potential job cuts as early as April 2024 and issued an open letter to Teamsters President Sean O’Brien seeking clarification. As of now, the letter remains unanswered.