United Parcel Service had a rough message to 12,000 employees last week: you’re fired. The revenue projections were off in the previous quarter, and the top brass at the shipping giant felt it was time to cut some of the fat from the top. The cuts will lead to an estimated $1 billion in savings. This recent string of layoffs will not impact union workers.
UPS and the Teamsters came down to the wire on their new agreement last year, where shipping nationwide could have been significantly impacted. UPS uses hundreds of thousands of Teamsters members as delivery drivers. The ones given pink slips to start the year will be white-collar workers. Their jobs will not be returning even if UPS does a massive turnaround. UPS CEO Carol Tomé also mandated a return to a five-day work week from the office. UPS plans to experiment with AI to handle tasks once handled by white-collar employees (via Wall Street Journal):
The cuts are primarily targeted at management staff worldwide as well as contract workers, UPS executives said Tuesday, adding that those jobs weren’t likely to return even when business picks up. The company has around 85,000 management employees.
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Many U.S. companies are laying people off as executives look to trim costs, eliminate redundant roles and speed decision-making. Beyond the budget-tightening that often takes place at the beginning of the calendar year, executives and analysts say, there is a growing sense that the work of slimming down isn’t over.
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UPS’s revenue declined in the fourth quarter amid weaker volumes in both its domestic and international businesses. For the full year, the average number of U.S. packages UPS handled a day fell 7.4% from 2022.
Tomé described 2023 as a difficult and disappointing year. This year also is expected to present challenges, despite the planned job cuts saving UPS an estimated $1 billion.
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UPS said it expects small-package volume growth in the U.S. to be less than 1% this year, though in the long-term it projects a 3% growth rate.
The emergence of artificial intelligence is accelerating that push because AI can perform more of the tasks handled by white-collar workers and because companies are diverting resources to develop the technology.
Automation has made it easier to take lots of data sets and analyze them to make predictions, said Sridhar Tayur, a professor of operations management at Carnegie Mellon University. “The number of humans needed in the loop is far less today,” said Tayur.
UPS is using machine learning to help it better determine what to charge customers for shipments. As a result, the company’s pricing department has needed fewer people to draft the terms of contracts including price and surcharges with individual shippers.
The publication added that UPS plans to unveil its grand plan to ramp up productivity at its investor conference on March 26. No doubt the costs from the new contract impacted the bottom line, which the paper noted, but AI can handle certain aspects of the business, whereas you still need drivers to deliver the packages. Look, if things get to their destinations, we’re all good. But it’s sad whenever someone is told their job has become redundant.
