In recent months, the logistics industry has faced a wave of transformation, marked by evolving consumer habits, automation, and shifting corporate strategies. Among the most significant developments are the layoffs announced by United Parcel Service (UPS)—a move that has sparked industry-wide discussion. One of the major contributing factors cited is the changing relationship between UPS and Amazon, the e-commerce titan that was once UPS’s biggest customer. As UPS restructures its operations to remain profitable, it is evident that Amazon’s evolving logistics model is influencing the entire delivery ecosystem.
UPS Layoffs: A Snapshot
In early 2024, UPS announced plans to lay off more than 12,000 workers, primarily in managerial and administrative roles. The move came shortly after UPS finalized a new labor agreement with the International Brotherhood of Teamsters, which represents over 340,000 UPS employees. The agreement, while favorable to workers in terms of wage increases and job protections, increased operational costs for UPS—prompting leadership to cut costs elsewhere.
The layoffs were part of a broader cost-cutting strategy aimed at saving approximately $1 billion annually. UPS CEO Carol Tomé described the decision as difficult but necessary, emphasizing the need to “align resources with business demand” in a challenging economic environment.
The Amazon Connection
While economic pressure and rising costs are part of the story, the UPS-Amazon relationship has drawn significant attention. Once reliant on UPS for a majority of its last-mile deliveries, Amazon has increasingly built out its own logistics network over the past decade. Today, Amazon delivers more than 70% of its packages in the U.S. through its own infrastructure.
This shift has significantly impacted UPS’s volume of Amazon-related shipments. Amazon went from being UPS’s largest customer to just one of many, as the e-commerce giant continues to invest in its delivery vans, aircraft, and warehouses. In fact, Amazon is now considered a direct competitor to traditional logistics companies like UPS and FedEx.
UPS, in turn, has made strategic decisions to reduce its dependency on Amazon. In 2020, UPS CEO Carol Tomé revealed that the company was “better off” with a smaller percentage of revenue coming from Amazon, opting instead to focus on more profitable customers, such as small and medium-sized businesses (SMBs).
A Strategic Shift or a Risky Gamble?
UPS’s move to reduce Amazon’s share of its business can be seen as both strategic and risky. On one hand, by limiting exposure to a single, demanding customer, UPS gains more control over pricing, service levels, and profitability. On the other hand, Amazon’s volume was massive, and replacing that level of business is no easy task.
The decision is particularly important in the context of labor costs. The recent Teamsters deal was historic, but expensive. UPS needs to serve customers that generate higher margins to support the increased wages and benefits now built into its labor model. Smaller businesses, while more profitable per package, cannot always provide the steady volume Amazon once did.
Amazon’s Logistics Ambitions
To fully understand the impact on UPS, it’s important to examine Amazon’s logistics expansion. Over the past few years, Amazon has developed a robust network of fulfillment centers, delivery stations, and transportation assets. Amazon Air, for instance, has grown into a full-fledged cargo airline. In parallel, the company has expanded its third-party logistics services, offering shipping for sellers who aren’t even using Amazon’s marketplace.
Amazon’s goal is clear: own the entire supply chain, from warehouse to doorstep. This end-to-end control allows for faster delivery, better customer experience, and cost savings. However, it also reduces Amazon’s reliance on third-party carriers like UPS.
By becoming its own logistics powerhouse, Amazon not only controls its customer experience but also enters into direct competition with UPS, FedEx, and even the U.S. Postal Service.
How This Impacts Workers
For workers, especially those affected by the UPS layoffs, the shift is personal and painful. Most of the roles eliminated were non-union, meaning they lacked the job security and protections afforded to many front-line drivers and package handlers. UPS has stated that it will try to absorb some affected employees into other roles, but large-scale layoffs remain a stark reality.
At the same time, Amazon’s growing logistics network is also employing thousands of workers—but often under different conditions. Amazon’s warehouse and delivery employees have frequently raised concerns about high workloads, surveillance, and limited job protections. While both companies are major employers, the nature of their workforce policies differs significantly.
The Broader Logistics Landscape
The UPS layoffs and Amazon’s rise as a logistics giant signal broader shifts in how goods are moved in the 21st century. Automation, AI, and changing consumer behavior are forcing logistics firms to innovate or risk falling behind.
Retailers are also diversifying their shipping partners, with many adopting hybrid models that combine traditional carriers with tech-based startups or gig economy solutions. This fragmentation is a challenge for incumbents like UPS, which have historically relied on stable, high-volume contracts.
UPS is responding by investing in automation, route optimization, and technology upgrades across its network. However, these investments require time and capital, both of which are stretched thin during a period of cost-cutting and restructuring.
What’s Next for UPS?
Looking ahead, UPS faces a crucial period. The company must adapt to lower Amazon volumes, maximize value from smaller customers, and maintain labor stability—all while managing investor expectations. The success of this strategy will depend on:
- Operational efficiency – Maximizing output from fewer resources.
- Customer diversification – Attracting and retaining profitable clients.
- Technological innovation – Keeping pace with Amazon’s efficiency.
- Employee morale and retention – Ensuring its workforce remains motivated and engaged despite layoffs.
In a sense, UPS is redefining itself—not just as a carrier, but as a modern logistics partner for a wider range of businesses. It remains to be seen whether this transformation will be enough to outpace Amazon’s aggressive growth and keep UPS competitive.
Conclusion
The UPS layoffs, while painful for thousands of employees, reflect a broader industry trend driven in large part by Amazon’s relentless push to dominate logistics. As Amazon continues to bring shipping in-house, traditional carriers like UPS must evolve quickly to survive. Whether this means rethinking delivery strategies, investing in new technologies, or targeting new customer segments, one thing is clear: the logistics landscape is changing, and UPS’s future depends on how well it navigates the Amazon effect.