UPS offers buyouts to drivers
UPS is offering a buyout for delivery drivers for the first time in its 117-year history. The parcel carrier is seeking cost savings as parcel volumes stay subdued and labor costs rise. There has also been a long slump in the company’s stock price.
UPS decided to offer buyouts to its drivers because the company is navigating “an unprecedented business landscape” and is reorganizing its network, a company spokesman said. In April, UPS said it would cut 20,000 operational jobs this year.
UPS drivers are among the highest-paid delivery drivers in the U.S. The average full-time driver will earn around $170,000 annually, including benefits, by the end of a five-year contract that UPS signed with the Teamsters in 2023. Many investors thought the company conceded too much ground to the union.
The International Brotherhood of Teamsters said the buyout violates the contract that UPS signed, and that drivers will be worse off if they take the plan.
“UPS is trying to weasel its way out of creating good union jobs here in America by dangling insulting buyouts in front of Teamsters drivers,” said Teamsters General President Sean O’Brien.
UPS has said it is deliberately delivering fewer packages for its largest customer, Amazon, because those parcels aren't profitable enough. UPS has closed some facilities and reduced work shifts in several locations.
In 2023, UPS offered buyouts to its pilots to reduce headcount and costs; nearly 200 pilots took the offer.
UPS decided to offer buyouts to its drivers because the company is navigating “an unprecedented business landscape” and is reorganizing its network, a company spokesman said. In April, UPS said it would cut 20,000 operational jobs this year.
UPS drivers are among the highest-paid delivery drivers in the U.S. The average full-time driver will earn around $170,000 annually, including benefits, by the end of a five-year contract that UPS signed with the Teamsters in 2023. Many investors thought the company conceded too much ground to the union.
The International Brotherhood of Teamsters said the buyout violates the contract that UPS signed, and that drivers will be worse off if they take the plan.
“UPS is trying to weasel its way out of creating good union jobs here in America by dangling insulting buyouts in front of Teamsters drivers,” said Teamsters General President Sean O’Brien.
UPS has said it is deliberately delivering fewer packages for its largest customer, Amazon, because those parcels aren't profitable enough. UPS has closed some facilities and reduced work shifts in several locations.
In 2023, UPS offered buyouts to its pilots to reduce headcount and costs; nearly 200 pilots took the offer.
📦 UPS is slimming down its delivery network, and union drivers are being offered the chance to exit early with a financial cushion.
In response to softening parcel volumes and shifting e-commerce dynamics, the company plans to offer voluntary buyouts to union-represented drivers. This comes on the heels of previously announced workforce reductions and facility closures aimed at boosting operational efficiency. As demand from major customer Amazon declines, UPS is recalibrating its strategy for long-term sustainability.
While UPS hasn’t disclosed how many drivers are eligible for the buyout, the initiative signals broader industry changes. With labor costs high, volumes falling, and Wall Street watching closely, this marks a key moment in how large carriers balance capacity, cost, and contract labor.
Some Key Takeaways:
• UPS is offering voluntary buyouts to unionized drivers, providing a “generous financial package” and preserving earned retirement benefits.
• The buyouts come amid a larger plan to reduce UPS’s workforce by 20,000 this year, particularly in delivery and package handling roles.
• UPS is shrinking its Amazon parcel volume by over 50% in 18 months, shifting away from lower-margin residential deliveries.
• The Teamsters union is urging its members to reject the offer, calling it a breach of the national labor agreement.
• The company has been closing facilities and focusing on higher-yield shipments to recover profit margins hurt by earlier labor cost spikes.
• UPS stock has dropped 16% year-to-date, underperforming the S&P 500, as investors weigh the carrier’s strategy and volume decline.
What It Could Mean for Shippers:
Shippers may experience tighter capacity and changing service priorities as UPS trims its network. Those relying on residential e-commerce delivery could see pricing shifts or delivery delays, while business shippers may benefit from UPS focusing on higher-margin, B2B freight. This shake-up also presents an opportunity for competitors to capture share, especially in last-mile and parcel services.
In response to softening parcel volumes and shifting e-commerce dynamics, the company plans to offer voluntary buyouts to union-represented drivers. This comes on the heels of previously announced workforce reductions and facility closures aimed at boosting operational efficiency. As demand from major customer Amazon declines, UPS is recalibrating its strategy for long-term sustainability.
While UPS hasn’t disclosed how many drivers are eligible for the buyout, the initiative signals broader industry changes. With labor costs high, volumes falling, and Wall Street watching closely, this marks a key moment in how large carriers balance capacity, cost, and contract labor.
Some Key Takeaways:
• UPS is offering voluntary buyouts to unionized drivers, providing a “generous financial package” and preserving earned retirement benefits.
• The buyouts come amid a larger plan to reduce UPS’s workforce by 20,000 this year, particularly in delivery and package handling roles.
• UPS is shrinking its Amazon parcel volume by over 50% in 18 months, shifting away from lower-margin residential deliveries.
• The Teamsters union is urging its members to reject the offer, calling it a breach of the national labor agreement.
• The company has been closing facilities and focusing on higher-yield shipments to recover profit margins hurt by earlier labor cost spikes.
• UPS stock has dropped 16% year-to-date, underperforming the S&P 500, as investors weigh the carrier’s strategy and volume decline.
What It Could Mean for Shippers:
Shippers may experience tighter capacity and changing service priorities as UPS trims its network. Those relying on residential e-commerce delivery could see pricing shifts or delivery delays, while business shippers may benefit from UPS focusing on higher-margin, B2B freight. This shake-up also presents an opportunity for competitors to capture share, especially in last-mile and parcel services.