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UPS offers voluntary buyouts to drivers for first time in 117-year history. What to know
UPS offers voluntary buyouts to delivery drivers for the first time in its history, as part of a major network reconfiguration that may cut 20,000 jobs.
For the first time in its 117-year history, United Parcel Service (UPS) on Thursday announced that it is offering voluntary buyouts to delivery drivers. According to Reuters, this is being done as part of the company’s largest network reconfiguration, which includes cutting as many as 20,000 jobs and shutting 73 facilities.
The company is focusing on cost savings due to stagnant parcel volumes and rising labor costs, as well as a steep decline in its stock price, The Wall Street Journal reported.
Why does this matter?
As many as 330,000 full and part-time employees, including delivery drivers, clerks and package handlers, are associated with UPS. The International Brotherhood of Teamsters represents these people. Out of these, UPS stated that only full-time drivers were eligible for a buyout.
However, it was not informed how many full-time drivers are currently employed by UPS.
Based in Atlanta, UPS had in April this year announced its network reconfiguration plan after witnessing a decline in deliveries, especially for its key customer, Amazon.com. This happened amid the massive tariffs announced by Donald Trump.
In a statement, the company said that its buyout package is in addition to any retirement benefits like the pension and healthcare.
UPS had in 2023 offered buyouts to its pilots as it looked forward to reducing costs and head count. At that time, roughly 200 pilots accepted the offer.
A spokesperson for the company said the decision to offer buyouts to the drivers was taken as it navigates an “unprecedented business landscape,” besides reorganizing its network, per the outlet.
Notably, drivers associated with UPS are considered among the highest-paid drivers in the United States. On an average, a full-time driver will earn nearly $170,000 on an annual basis, including several benefits, by the end of the five-year contract which the company signed with Teamsters in 2023.
As per The Wall Street Journal report, several investors were of the view that it conceded too much ground to the union.
Since July 24, 2023, the shares of UPS have fallen by nearly 45 per cent. A day before this, the company reached an agreement with the union.
In the first quarter of this year, UPS had already registered a 3.5 per cent decline in its average daily package volume, reports said.
Further, the company said it will be delivering fewer packages for its largest customer (Amazon.com) since they were not making enough profit.
UPS informed in April that it will cut 20,000 operational jobs in 2025.
FAQs:
1. Why is UPS cutting costs?
This is being done due to less parcel volumes, steep rise in labor costs and decline in stock price.
2. Who owns United Parcel Service?
The publicly traded company is owned by multiple shareholders.
3. How much has UPS share been affected?
Since July 2023, its shares have come down by nearly 45 per cent.
