Parcel delivery company UPS has announced its decision to cut 12,000 jobs in response to a challenging year marked by economic downturns and labor disputes that impacted customer

retention. CEO Carol Tomé acknowledged 2023 as a "difficult and disappointing year" and highlighted the company's focus on investing in artificial intelligence (AI) for enhanced efficiency.

The job cuts are anticipated to yield a cost reduction of $1 billion (£790 million) this year. UPS, considered an economic health indicator, struggled with declining sales and profits, attributing the challenges to economic weaknesses in Europe and Asia and disruptions caused by a potential summer strike in the US.

The company aims to regain lost business, forecasting modest growth in 2024. However, analysts found the outlook weaker than expected, leading to a more than 7% decline in shares. UPS also warned of continued costs associated with its new contract with the Teamsters union. The planned job cuts, representing around 2.5% of the global workforce, will predominantly impact management staff and some contractors.

UPS executives emphasized that these positions will not be reinstated, reflecting a shift in the company's operational approach. The firm is exploring the potential sale of Coyote, a truckload brokerage business acquired in 2015. Despite the challenges, UPS sees opportunities for productivity enhancement through technological advancements like generative AI. Concerns about shipping disruptions due to conflicts in the Red Sea and drought-related challenges in the Panama Canal were also highlighted by CEO Carol Tomé. Photo by Rudolf Stricker, Wikimedia commons.