UPS on Tuesday announced it would be cutting 12,000 jobs, or 2.4% of its global workforce, after a “disappointing” year and sliding revenue.

Revenue for 2023 declined 9.3%, to $91 billion, with operating profit down 28.7% to $9.9 billion, the company said in an earnings call, citing a slowdown in demand for package delivery.

While the company predicted 2024 revenue to range from $92 billion to $94.5 billion, that was less than the $95.5 billion or more Wall Street wanted to see. The company’s shares fell 8%.

“I want to thank UPSers for providing the best on-time performance of any carrier for the sixth year in a row,” said CEO Carol Tome said in a statement, adding that “2023 was a unique and difficult year, and through it all we remained focused on controlling what we could control, stayed on strategy and strengthened our foundation for future growth.”

UPS execs said the cuts will save $1 billion and the jobs will be culled from among management roles and contractors. Employees who do remain will be required to return to the office five days a week this year, the company said.

“We are going to fit our organization to our strategy and align our resources against what’s widely important,” Tome told investors on the call.

Under the new Teamsters contract agreement approved in September — which ended months of contentious negotiations and narrowly avoided a catastrophic strike — full- and part-time workers will get annual raises over the next five years. In addition, 7,500 full-time jobs will be created, and 22,500 open ones will be filled, which will enable more part-time employees to go full time.

But as the negotiations dragged on last year and strike threats loomed, skittish customers took their business elsewhere. UPS is working to get that business back, but so far it has recouped just 60% of it, the company said.

The revenue drop stings especially in the wake of the record surge that UPS’s business saw during the pandemic’s first three years, when online shopping mushroomed, with sales for the first time surging above $100 billion in 2022.

With News Wire Services

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