UPS Cuts 30,000 Jobs as Amazon Divorce Accelerates
Shipping giant announces layoffs and facility closures as it unwinds low-margin Amazon partnership. Company expects to exit Amazon deal by mid-2026.
United Parcel Service is cutting another 30,000 jobs in 2026 as it completes its divorce from Amazon, the company announced Tuesday alongside Q4 earnings.
The layoffs bring UPS's total headcount reduction to at least 78,000 positions since early 2025. The company is also closing 24 more facilities in the first half of this year, with additional closures possible later.
The Amazon Unwind
Amazon agreed in January 2025 to halve its shipping volume with UPS by mid-2026. The e-commerce giant was UPS's largest customer for nearly three decades, but the relationship had become unprofitable.
"We're in the final six months of our Amazon accelerated glide-down plan," CEO Carol Tomé said on Tuesday's call. "For full-year 2026, we intend to glide down another million pieces per day while continuing to reconfigure our network."
The math behind the split is straightforward. Amazon's fulfillment-center outbound shipments—packages going from warehouses to customers—generated high volume but razor-thin margins for UPS. Processing a million packages daily at near-zero profit isn't a business worth preserving.
CFO Brian Dykes quantified the operational impact: UPS plans to reduce total operational hours by approximately 25 million associated with the Amazon decline. That translates directly into the 30,000 position cuts.
How It Happens
The job cuts will come primarily through attrition and a voluntary separation program for full-time drivers. UPS isn't doing mass layoffs in the traditional sense—it's letting natural turnover accomplish the downsizing.
That's a gentler approach than many companies take, but the Teamsters union isn't pleased. Kara Deniz, a union spokesperson, called the buyout terms "disrespectful" and suggested members may reject them.
The facility closures are more immediate. UPS closed 93 buildings last year and will shutter another 24 in the first half of 2026. These are likely sorting hubs and distribution centers that no longer have enough volume to justify operating costs.
Q4 Results Beat Expectations
Despite the strategic upheaval, UPS's fourth-quarter results topped forecasts.
The company reported $2.6 billion in profit on $24.5 billion in revenue. That represents growth from the prior year despite shedding low-margin Amazon volume—exactly the margin improvement Tomé has been targeting.
Full-year 2026 revenue guidance of $89.7 billion exceeded the $87.94 billion analyst consensus. Investors rewarded the beat: shares rose more than 3% during Tuesday's trading and are up over 11% year-to-date.
The Strategic Pivot
UPS is betting it can replace Amazon volume with higher-margin business from healthcare, retail, and small-business shippers. These customers pay more per package and have less bargaining power than the world's largest e-commerce company.
The strategy has risks. Amazon built a competitor delivery network specifically to reduce dependence on UPS and FedEx. Other large retailers may eventually do the same. And economic weakness could pressure the small-business segment UPS is targeting.
But the alternative—continuing to subsidize Amazon's logistics at suboptimal margins—wasn't sustainable either. Sometimes the best business decision is firing your largest customer.
The Broader Trend
UPS isn't alone in rethinking Amazon relationships. FedEx has similarly reduced its Amazon exposure in recent years. Third-party delivery networks have proliferated. The logistics industry is fragmenting as shippers seek alternatives to the dominant carriers.
For UPS shareholders, the question is whether margin improvement from shedding Amazon outweighs volume loss. So far in 2026, the answer appears to be yes. Revenue guidance exceeded expectations, and the stock has outperformed the broader market.
The Amazon partnership defined UPS for a generation. Its unwinding will define the next phase of the company's evolution.