UPS has announced that it will make 12,000 job cuts after the company’s income declined by $1.87billion and said that ‘2023 was a disappointing year.’ 

In an post-earnings call on Tuesday, the package delivery company said that the income decline is a result of higher union labor costs and softer demand. 

‘2023 was a unique and difficult year. Through it all we remained focused on controlling what we could control, stayed on strategy and strengthened out foundation for future growth,’ CEO Carol Tomé said.  

A spokesperson for UPS said that 75 percent of the cuts are set to take place in the first half of the year and that jobs around the world will, in all positions will be affected. 

The layoffs come just five months after UPS and Teamsters reached a $30billion deal with its 340,000 person- union, avoiding a potentially crippling strike. 

UPS has announced that it will make 12,000 job cuts after the company’s income declined by $1.87billion

The deal pushed the company’s full-time worker’s hourly pay to $49 and $21 an hour for part-time employees.   

The looming strike sorely effected the business as concerned customers decided to use other carries like FedEx and Amazon. 

Since the downfall, UPS said that it has only gotten around 60 percent of its lost business back, but expects to see that number rise.  

The company has predicted that the global revenue for 2024 is expected to hit between $92billion to $94.5billion, but analysts’ have estimated $95.57billion, according to LSEG data. 

‘The small package market in the U.S., excluding Amazon is expected to grow by less than 1%’, Tome said. 

Customers who have also shifted to less lucrative ground-based delivery from air-based services has also played a role in the company’s decline. 

CEO Carol Tomé said that 2023 was a ‘difficult year’ and that ‘Through it all we remained focused on controlling what we could control, stayed on strategy and strengthened out foundation for future growth’ 

CFO Brian Newman said that labor contract-related costs in the second half of 2023 were expected to be about $500million more than the company’s estimates

UPS reported a 6.9 percent decline in revenue internationally due to soft volume in Europe in the fourth quarter. They also experienced a 7.3 percent decline from its domestic segment. 

The company reported quarterly revenue of $24.9billion, down from $27billion a year earlier, and below analysts’ estimates of $25.43billion.

Labor contract-related costs in the second half of 2023 were expected to be about $500million more than the company’s estimates, Chief Financial Officer Brian Newman had previously said.

Adjusted profit fell to $2.47 per share from $3.62 a year earlier, but came in slightly above analysts’ estimates of $2.46 per share.

‘“It’s a change in the way we work. So as volume returns to the system, we don’t expect these jobs to come back. It’s changing the effective way that we operate,’ Newman said.