The UPS layoffs mark a significant transition for United Parcel Service (UPS) in 2025, as the company is cutting 20,000 jobs and closing 73 facilities following a major shift in its partnership with Amazon. The drastic move is part of the company’s effort to improve profitability, restructure its logistics network and reduce its reliance on low-margin contracts.
Why are UPS Layoffs Linked to Amazon?
The main reason behind UPS’ layoffs is a strategic reduction in package volume from Amazon. Although Amazon remains UPS’s largest customer, its shipments reportedly generate lower profit margins. UPS CEO Carol Twomey emphasized that some Amazon fulfillment center operations “simply weren’t profitable.”
In response, UPS has cut its Amazon package volume by 50%, allowing it to prioritize small to medium-sized business (SMB) customers with better revenue potential. By eliminating less profitable contracts, UPS hopes to create operational space for higher-margin deliveries and improve long-term financial stability.
Economic pressures and global constraints
The changes made by Amazon at the time of the UPS layoffs align with growing economic uncertainties. The company cited both tariffs and macroeconomic insecurities as contributing factors for the cuts. With customer demand closely tied to global trade flows, UPS is navigating a challenging landscape marked by inflation and cautious consumer behavior.
Recent reports show a 30-40% drop in bookings from China to the U.S., raising concerns about the knock-on effects of tariffs on shipping companies. Although some businesses ramped up imports ahead of tariff implementation, the current slowdown suggests a wait-and-see approach by many shippers.
Moving Away from Amazon
UPS’s move reflects what other logistics giants, such as FedEx, have already done – distancing themselves from Amazon due to their growing in-house delivery capabilities. Amazon now manages a large part of its logistics independently, thanks to its sophisticated supply chain network.
UPS, which previously benefited from the boom in e-commerce, is now re-aligning its priorities. The company’s annual revenue exceeded $100 billion during the pandemic, with Amazon contributing 10-15%. But as volume grew, so did the realization that not all business is good business.
Cutting off ties with a portion of Amazon’s volume may hurt revenue initially, but UPS sees it as an opportunity to focus on quality over quantity. As one industry analyst put it, “They’re trying to fill capacity with SMB clients who are more profitable. That’s a good thing for margins.”
Investing in Automation and Flexibility
Despite layoffs and closures, UPS is not backing off on technology investments. The company continues to upgrade its facilities with automation to handle changing market demands more efficiently. Some plants are being closed, but others are being revamped to be leaner and more responsive.
By optimizing its logistics infrastructure, UPS hopes to remain competitive in an industry that is increasingly being shaped by speed, cost-efficiency, and customer experience.
Tariffs and Consumer Impact
In parallel, UPS and its customers are also grappling with rising costs driven by tariffs. Uncertainty around international trade policies has forced many businesses to rethink supply chain strategies. Some tariffs are absorbing costs, while others are passing them on to consumers – adding to inflationary pressures.
For example, Amazon for a while considered displaying U.S. tariff costs next to product prices, a move that was criticized and later shelved. Still, such proposals underscore broader tensions between retailers, logistics providers, and government policies.
What’s Next for UPS?
UPS layoffs Amazon’s restructuring signals a new chapter for the shipping giant. By reducing unprofitable volume and investing in future-ready technologies, UPS aims to deliver better returns and stabilize operations in an uncertain economic environment.
While cutting 20,000 jobs and closing dozens of facilities are painful short-term measures, the long-term outlook depends on better business choices—ones that prioritize profitability, adaptability, and customer value.
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