By Mark Maurer
United Parcel Service has generated roughly $3.5 billion in savings as it trims down following a pullback from Amazon.com deliveries, but its CFO says plenty of work remains to boost the profitability of its package deliveries.
"As with any kind of big restructuring like this, the last third is harder than the first third," Chief Financial Officer Brian Dykes said in an interview. "There is a lot of planning that goes into how we're going to sequence the buildings that we're going to consolidate, and when and how we reduce the staffing."
The delivery giant has been working to right-size its business after reducing volumes from Amazon.com, which was once its largest customer. The company this week said it planned to cut an additional 30,000 operational positions this year, on top of 48,000 operational positions eliminated in 2025. It closed more than 90 buildings in 2025 and plans to close at least 24 in the first half of the year.
"The reality is with less volume, we need less positions in order to support that volume," Dykes said. "Fewer hours for packaged orders and drivers."
UPS has faced a barrage of challenges since it unveiled plans in January 2025 to significantly slash its reliance on Amazon deliveries. The company last year contended with the effects of tariff-fueled trade wars, the end of the de minimis exemption and higher-than-anticipated delivery expenses for its Ground Saver offering, while also working to help customers weather challenges. UPS said it decided to scale back Amazon shipments because the high volume wasn't profitable enough and dented overall margins.
"Last year was a hard year," Dykes said. "A lot of things were different than what we set out expecting."
"We see this moment of global trade disruption as an opportunity," he added.
UPS plans to eliminate most of the 30,000 jobs in 2026 through voluntary attrition, with the remainder through voluntary buyouts for full-time drivers, Dykes said. The company said it has about 490,000 full-time employees globally.
The continuing cuts are a result of UPS in 2023 reaching a five-year labor agreement with the International Brotherhood of Teamsters, granting the average full-time driver $170,000 in annual pay and benefits. Shares have fallen 36% since the contract ratification as of Friday, as the company has navigated a range of challenges.
UPS will temporarily find it difficult to take costs out of the business in the first half of the year as it further drops Amazon volume and replaces its MD-11 aircraft fleet following a November cargo-plane crash, said David Vernon, a senior analyst at Bernstein Research.
At the same time, the company is still dealing with fallout over trade shifts and the end of the de minimis rule. But that period will soon pass, he said. The Trump administration in May ended the so-called de minimis tariff exemption for packages from China and for goods from all other countries in August.
"They still have to get through the first half of this year, which is going to be hideous," Vernon said.
The company has continued investing during the restructuring, focused on expanding its healthcare capabilities and international footprint in areas such as Hong Kong and the Philippines, Dykes said. It spent about $2 billion in acquisitions in that time, including the purchase of Canada's Andlauer Healthcare Group for roughly $1.6 billion.
UPS is planning about $3 billion in capital expenditures this year, which is a decrease from the nearly $3.5 billion it spent in 2025.
Earnings show the company is making progress with its bet, analysts said. UPS booked $1.79 billion in profit for the quarter ended December, up from $1.72 billion the prior-year period.
"As we come out of the back of the Amazon drawdown, you'll be able to see the growth associated with those investments," Dykes said.
UPS's maintenance capex is going to help generate more free cash to help fund its dividend payments in 2026, which the company had to borrow in the past to cover the shortfall, said Jason Seidl, a senior transportation analyst at TD Cowen. "In the future, it looks like they can actually avoid that, which is a good thing," Seidl said.
Write to Mark Maurer at mark.maurer@wsj.com
(END) Dow Jones Newswires
January 30, 2026 17:47 ET (22:47 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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