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UPS Package Volume Drops 7.4% in ‘Difficult and Disappointing’ 2023

UPS is cutting jobs and considering selling one of its businesses as shipping volumes decline.

The shipping giant will eliminate 12,000 positions — chiefly full-time and part-time management roles and contract workers — in a bid to save $1,000,000, the company said during an earnings call Tuesday (Jan. 30).

“2023 was a unique and, quite candidly, difficult and disappointing year,” said UPS CEO Carole Tomé. “We experienced declines in volume, revenue and operating profit and all three of our business segments.”

Average daily domestic shipping volumes dropped 7.4% in the U.S. and 8.3% internationally. 

As it looks to 2024, UPS will explore the sale of Coyote, the truck brokerage company it purchased in in 2015, and which Tome described as a “highly cyclical” business with “considerable earnings volatility.” 

“I don’t think we fully understood at the time was just how cyclical this business is,” she said later in the call’s Q&A session when asked about the decision to acquire Coyote. 

Management also says it plans to lean into opportunities in the small- to medium-sized business (SMB) segment — which accounted for 28% of UPS’s U.S. volume — as well as the healthcare field, a $10 billion source of revenue for the company.

Last year saw both UPS and rival FedEx suffer decreased demand, leading the companies to lean into discounting during the holiday season.

2023 was also the year in which Amazon overtook UPS as the largest delivery business in America, after surpassing FedEx in 2020.

A Wall Street Journal report in late November — citing internal Amazon data and inside sources — noted that the U.S Postal Service is still the largest parcel service in terms of volume, shipping hundreds of millions of packages for all three companies.

Still, by Thanksgiving of last year, Amazon had delivered more than 4.8 billion packages in the U.S, with the company projecting it would ship 5.9 billion by year’s end, up from 5.2 billion during the previous year.