UPS is offering buyouts to drivers and reducing workforce by 20,000 employees to cut costs.

United Parcel Service (UPS) is facing challenges with high labor costs and soft parcel volumes, leading to operational difficulties. To address this, UPS is offering buyouts to full-time delivery drivers for the first time in its history.

UPS plans to reduce its workforce by 20,000 employees this year and shut down 73 facilities to lower labor costs. The decision to reduce business with Amazon, its largest customer, also contributed to the need for cost-cutting measures.

FedEx, UPS’s rival, is also cutting costs by laying off over 480 employees and implementing cost-saving initiatives through programs like DRIVE and Network 2.0.

UPS’s stock has declined by over 24% in the past year and is trading at a higher valuation compared to industrial levels. The company’s earnings estimates for 2025 and 2026 have been revised downward.

UPS currently holds a Zacks Rank #4 (Sell) and is focused on cost-cutting measures to address demand challenges. Investors can access Zacks’ recommendations for a limited time for only $1 to explore potential opportunities.

Read more at Nasdaq: UPS Looks to Cut Costs to Mitigate Demand Woes: What’s the Road Ahead?