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UPS To Cut 20,000 Jobs Due to Declining Amazon Shipments and Tariffs

  • Kelsea Ansfield
  • Apr 29
  • 7 min read


At Gain Consulting, we empower U.S. shippers with data-driven strategies to navigate disruptions in the global supply chain. On April 29, 2025, Reuters reported that United Parcel Service (UPS), the world’s largest package delivery company, will cut 20,000 jobs and close 73 facilities to address declining shipments from Amazon and economic uncertainty fueled by President Donald Trump’s sweeping tariffs. Despite these challenges, UPS posted a first-quarter revenue of $21.5 billion, exceeding Wall Street expectations of $21.05 billion, with its U.S. domestic segment growing 1.4% to $14.46 billion. This blog post examines UPS’s restructuring, the broader impact of tariffs on logistics, and practical recommendations for U.S. shippers to optimize operations in 2025.


UPS’s Restructuring: A Response to Amazon and Tariffs

UPS’s decision to eliminate 20,000 jobs—roughly 4% of its global workforce—and shut down 73 facilities by June 2025 is a bold move to save $3.5 billion annually. This follows a 12,000-job cut in 2024, signaling a multi-year effort to streamline operations amid declining parcel volumes. The company is also increasing automation and selling assets to further reduce costs, incurring $400–600 million in expenses for severance and lease terminations in 2025 (Reuters, April 29, 2025).


A key driver is the planned reduction of deliveries for Amazon, which accounted for 11.8% of UPS’s revenue in 2024. In January 2025, UPS announced it would cut Amazon volumes by over 50% by mid-2026, reducing daily deliveries from an average of 250,000 packages (2021–2024) to approximately 125,000. CEO Carol Tomé called Amazon’s business “extraordinarily dilutive” to margins, prompting a shift toward higher-margin customers like Temu, Shein, and USPS SurePost (Reuters, January 30, 2025). This aligns with Amazon’s expansion of its own logistics network, which now handles over 70% of its U.S. deliveries internally (Supply Chain Dive, April 2025).


The Trump administration’s tariffs exacerbate these challenges. UPS is the first major U.S. company to implement large-scale layoffs in response to trade slowdowns caused by:

  • 10% baseline tariff on most imports, effective February 4, 2025.

  • 25% tariffs on Canadian and Mexican goods (partially paused for 90 days).

  • 145% tariffs on Chinese imports (125% base rate plus 20% import tax), effective April 10, 2025.

  • Elimination of the de minimis exemption for shipments under $800, effective May 2, 2025.

These tariffs have led to a 64% drop in U.S.-China imports in early April 2025 (Bloomberg, April 15, 2025) and a projected 1% decline in global container volumes, or 1.8 million TEUs, for 2025 (FreightWaves, April 25, 2025). The loss of the de minimis exemption has hit e-commerce volumes from Temu and Shein, which ship approximately 9,000 metric tons of cargo daily (Xeneta, February 2025).


Despite these headwinds, UPS’s Q1 2025 performance was strong, with $21.5 billion in revenue and a 1.4% increase in U.S. domestic revenue, driven by air cargo growth and higher revenue per piece (Reuters, April 29, 2025). However, the company’s decision to withhold 2025 guidance reflects uncertainty, as noted by Evercore ISI analyst Jonathan Chappell: “The removal of 2025 guidance will likely create a wide range of outcomes.”

Key Takeaway: UPS’s job cuts and facility closures aim to offset declining Amazon and e-commerce volumes while navigating tariff-driven trade disruptions. Shippers must prepare for potential service changes and cost increases.


Tariff-Driven Trade Slowdown: A Broader Context

The Trump administration’s tariffs, enacted under the International Emergency Economic Powers Act (IEEPA) and Section 232/301 authorities, are reshaping global logistics. Reuters describes the trade impact as the most significant in over a century, with CEO Carol Tomé noting, “The world has not been faced with such enormous potential impacts to trade in more than 100 years.” Key effects include:

  • Reduced Import Volumes: VT Markets reports a 20.5% year-over-year drop in U.S. TEU volumes for May 2025, with consumer goods like toys (-12.6%) and apparel (-9.5%) hit hardest (S&P Global, April 15, 2025). The de minimis exemption removal has increased costs for e-commerce, with new customs fees like FedEx’s $4.50 or 2% disbursement fee adding to expenses (Bloomberg, April 15, 2025).

  • Retaliatory Measures: China has imposed 34% tariffs on U.S. goods and canceled 12,000 tons of pork orders (CNBC, April 14, 2025). Canada and Mexico are preparing countermeasures, with Mexico’s peso at risk of a 12% decline if 25% tariffs are fully implemented (Reuters, April 2025).

  • Corporate Uncertainty: Reuters notes that 40 companies, including General Motors, Kraft Heinz, and Electrolux, have pulled or lowered 2025 guidance due to tariff costs estimated at $3 billion (Reuters, April 29, 2025). The S&P 500 faced its worst quarter in three years by March 2025 (Reuters, April 3, 2025).


The tariffs are driving a 15% projected decline in U.S. cargo volumes for 2025 (VT Markets, April 14, 2025), reducing demand for parcel services. CNBC reports that cash-strapped businesses are abandoning freight at ports, with tariffs on Chinese goods rising to 110–120% for some products like shoes (CNBC, April 9, 2025).

Key Takeaway: Tariffs are shrinking trade volumes and increasing costs, forcing shippers to adapt to a volatile market.


Supply Chain Dynamics: Opportunities and Challenges

The UPS restructuring and tariffs occur amid broader supply chain trends:

  1. E-Commerce Resilience: Despite Amazon’s pullback, e-commerce remains robust. Digital Commerce 360 reports Walmart’s 16% online sales growth in Q4 2025, with delivery expansion to 12 million households driving last-mile demand. UPS’s shift to Temu and Shein could stabilize some volume losses (Digital Commerce 360, April 18, 2025).

  2. Cross-Border Trade: BTS Transborder Freight Data shows $131.6 billion in U.S.-Canada-Mexico freight in February 2025, up 2.1%, with trucking ($86.6 billion, +3.9%) leading (BTS, April 23, 2025). Ports like Laredo, TX ($23.4 billion) and Detroit, MI ($8.1 billion) are critical, but tariff risks loom.

  3. Freight Market Softness: The American Trucking Associations forecasts 1.6% freight volume growth in 2025, indicating caution (Transport Topics, April 24, 2025). LTL carriers show mixed results, with Knight-Swift’s 26.7% revenue growth contrasting TFI’s 39.6% profit decline (Transport Topics, April 24, 2025).

  4. Automation Trends: UPS’s automation push mirrors industry efforts. FedEx targets $2.2 billion in cost reductions via automation in 2025 (Reuters, March 20, 2025), while Walmart’s Symbotic robotics enhance fulfillment (Digital Commerce 360, April 18, 2025).

  5. Consumer Price Pressures: S&P Global estimates 27–30% additional duties on consumer goods, prompting retailers like Target and Best Buy to warn of price hikes (Reuters, April 22, 2025). This could reduce demand, further impacting parcel volumes.

Key Takeaway: E-commerce and cross-border trade offer growth potential, but soft freight demand and rising costs require strategic adjustments.


Implications for U.S. Shippers

UPS’s restructuring and tariffs present several challenges and opportunities:

  1. Capacity Reductions: Closing 73 facilities may limit UPS’s ground and last-mile capacity, potentially causing delays or higher rates for shippers (Reuters, April 29, 2025).

  2. Cost Increases: The de minimis exemption loss and new tariffs will raise shipping costs, particularly for e-commerce. CBS News reports 30% average price hikes on Amazon products due to tariffs (CBS News, April 25, 2025).

  3. Service Prioritization: UPS’s focus on high-margin customers may reduce service availability for smaller shippers, requiring alternatives (Reuters, January 30, 2025).

  4. E-Commerce Opportunities: Strong e-commerce demand, driven by Walmart and Amazon’s logistics growth, supports parcel needs, but shippers must manage tariff-related costs (Digital Commerce 360, April 18, 2025).

  5. Trade Shifts: CNBC notes that 57% of companies plan to relocate supply chains to low-tariff regions like Vietnam and India, offering sourcing alternatives (CNBC, April 14, 2025).

Key Takeaway: Shippers must address capacity constraints and rising costs while capitalizing on e-commerce and new sourcing opportunities.


Strategic Recommendations for U.S. Shippers

To thrive in 2025, U.S. shippers should implement the following strategies:

  1. Diversify Carrier Networks: Partner with FedEx, USPS, or LTL carriers like Knight-Swift to offset UPS capacity reductions. Monitor FedEx’s Network 2.0 closures for service impacts (Reuters, March 20, 2025).

  2. Utilize Bonded Warehouses: Defer duties for up to five years using customs bonded warehouses, especially for electronics and apparel. Demand for these facilities has surged sixfold (Bloomberg, April 15, 2025).

  3. Optimize Cross-Border Trucking: Leverage hubs like Laredo, TX and Detroit, MI for U.S.-Canada-Mexico shipments. Use transload facilities to consolidate loads and lower costs (BTS, April 23, 2025).

  4. Enhance Last-Mile Efficiency: Align with carriers offering same-day delivery to meet e-commerce demand. Adopt geospatial technology for optimized delivery zones, as seen with Walmart (Digital Commerce 360, April 18, 2025).

  5. Shift Sourcing: Relocate manufacturing to Mexico, Vietnam, or India to avoid 145% Chinese tariffs. Reuters reports MGA Entertainment moving 40% of toy production to these regions (Reuters, April 22, 2025).

  6. Monitor Freight Rates: Use SONAR or Freightos to track parcel and LTL rates. DataDocks notes a 41% drop in April freight bookings, signaling volatility (DataDocks, April 2025).

  7. Tighten Inventory Management: Prepare for a 15% cargo volume decline by optimizing stock levels and focusing on high-demand goods like pharmaceuticals (+17.3%, S&P Global, April 15, 2025).

  8. Invest in Automation: Partner with automated carriers or adopt in-house robotics, following Walmart’s Symbotic model, to reduce costs (Digital Commerce 360, April 18, 2025).

Key Takeaway: Diversification, technology, and strategic sourcing will enable shippers to mitigate UPS’s restructuring and tariff impacts.


How Gain Consulting Can Help

Gain Consulting offers customized solutions to address the 2025 supply chain challenges:

  • Carrier Strategy: Build resilient networks with alternative carriers to ensure capacity.

  • Cross-Border Expertise: Optimize logistics through key ports like Laredo and Detroit.

  • E-Commerce Solutions: Implement AI-driven tools for last-mile efficiency.

  • Real-Time Insights: Provide analytics to navigate volume declines and rate fluctuations.


The 20,000 UPS job cuts and tariff-driven trade disruptions signal a turbulent 2025, but proactive strategies can drive success. Contact Gain Consulting today to strengthen your supply chain.


Sources: Reuters, April 29, 2025; Reuters, January 30, 2025; Bloomberg, April 15, 2025; FreightWaves, April 25, 2025; Supply Chain Dive, April 2025; Digital Commerce 360, April 18, 2025; BTS Transborder Freight Data, April 23, 2025; Transport Topics, April 24, 2025; VT Markets, April 14, 2025; CNBC, April 14, 2025; CBS News, April 25, 2025; S&P Global Market Intelligence, April 15, 2025

 
 
 

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