To further manage operational headcount and align with volume demand, UPS plans to cut 12,000 jobs this year to realize $1 billion in cost savings.

The target of the workforce reduction will be UPS’ full-time and part-time management positions, of which UPS currently employs 85,000, as well as contract positions.

UPS Chief Financial Officer Brain Newman said the plan is part of a overall change to way the company operates.

“It’s a change in the way we work,” Newman said during UPS’ fourth-quarter 2023 earnings call. “So, as volume returns to the system, we don’t expect these jobs to come back. It’s changing the effective way that we operate.”

The change follows 4Q23 results, which logged a revenue of $24.9 billion, a decline of 7.8% from the same period last year, and down from $27 billion in 2022.

Both domestic and international revenue and volume have suffered in the quarter.

Domestic revenue decreased 7.3%, driven by a 7.4% decrease in average daily volume, while international revenue decreased 6.9%, driven by an 8.3% decrease in average daily volume primarily due to softness in Europe.

When Will the UPS Jobs Be Cut?

About 75% of the UPS job reductions announced in the 4Q23 earnings call will happen in the first half of 2024, the rest will come in the back-end, according to UPS’ Newman.

The cuts will drive a $1 billion cost savings in the 2024 calendar year, but the full-year benefit will come in 2025, according to UPS CEO Carol Tomé.

UPS currently employs 495,000 people globally, compared to 540,000 people it employed when demand was peaking during the COVID-19 pandemic.