The global logistics giant UPS has announced a dramatic restructuring plan that will eliminate up to 30,000 jobs and close 24 operational facilities, marking a significant pivot in its business strategy. This move follows the company's previous reduction of 48,000 positions in 2025 and signals UPS's determined effort to reduce reliance on Amazon's business while focusing on higher-margin freight services.
Strategic Pivot Away From Amazon
UPS has identified scaling back its Amazon delivery operations as central to its transformation. While Amazon orders represent substantial volume, the company maintains they carry relatively low profit margins that have diluted overall profitability. UPS has prioritized reducing its Amazon business, aiming to establish a healthier revenue structure by 2026.
The reduction of Amazon-related operations is expected to conclude within the next six months. Building on its 2025 reduction of 1 million daily packages, UPS plans to cut an additional 1 million packages per day by 2026—an aggressive target demonstrating the company's commitment to this strategic shift.
Cost-Cutting Measures and Operational Optimization
Beyond workforce reductions and facility closures, UPS will implement a voluntary driver buyout program and continue optimizing its freight network. These measures aim to further reduce operating costs, improve efficiency, and establish a foundation for future growth.
The company anticipates these changes will generate approximately $3 billion in annual cost savings. While the Amazon scale-back may temporarily impact revenues in the first half of 2026, UPS expects a sequential recovery in the latter half of the year as the transition completes.
Strong Performance Amid Transformation
Despite the restructuring challenges, UPS delivered impressive Q4 2025 results with consolidated revenue reaching $24.5 billion—surpassing market expectations of $24 billion. This outperformance was driven by increased higher-margin product mix, fueling continued growth in revenue per piece. Domestic U.S. revenue per piece grew 8.3% year-over-year, with international revenue per piece increasing 7.1%.
UPS CFO Brian Dykes noted that during the traditional peak season, small and medium business orders slightly exceeded expectations while large retailer demand remained soft—a trend suggesting opportunities for diversifying UPS's client base.
Future Outlook
UPS projects full-year 2026 revenue at $89.7 billion. To achieve this target, the company will continue its strategic transformation, operational efficiency improvements, and expansion into higher-profit business segments. While acknowledging short-term challenges, UPS leadership believes these adjustments will position the company for sustainable profit growth and maintain its leadership in the competitive logistics market.
Industry analysts have largely endorsed UPS's strategic direction, noting that overreliance on a single powerful client—particularly a dominant e-commerce platform with strong bargaining power—creates long-term margin pressure. By diversifying its customer base and focusing on higher-margin services, UPS appears positioned for more stable profitability.
The substantial workforce reductions do present implementation challenges, including employee transition management, corporate reputation maintenance, and operational stability during the transformation period. However, most observers agree this "leaner" approach should ultimately strengthen UPS's competitive position in the evolving logistics landscape.