Atlanta-based UPS said April 29 that it expects to reduce its workforce by about 20,000 positions this year and close 73 leased and owned buildings by the end of June 2025 as it reduces the volume of deliveries it makes for customer Amazon.com.
“We are continuing to review our network and may identify additional buildings for closure,” the package delivery company said in its first-quarter filing with the Securities and Exchange Commission.
Asked specifically about the Jacksonville hub at 4420 Imeson Road in Westside Industrial Park, the company issued a statement:
“As announced on our Q1 earnings call, we are executing the largest network reconfiguration in UPS history. This strategic initiative will optimize the capacity of our network to align with expected volume levels and enhance productivity through additional automation,” it said.
“The reconfiguration will impact positions, and we are committed to supporting our employees throughout this process.”
The company did not address the Jacksonville operation but said:
“While our building footprint is changing, our record of reliable pickup and delivery is not. We remain committed to providing industry-leading service to customers in more than 200 countries and territories around the world.”
UPS said revenue fell 0.7% to $21.5 billion in the quarter that ended March 31 from the first quarter of 2024.
Consolidated operating profit was $1.7 billion, up 3.3%.
Jacksonville hub
Duval County property records show United Parcel Service Inc. owns almost 105.8 acres at 4420 Imeson Road and buildings totaling 948,400 square feet. It built a 564,690-square-foot mega warehouse, office and support buildings in 1989. It added 383,710 square feet of warehouse and support space in 2019.
The Jacksonville hub has played a pivotal role for UPS, a top executive told the JAXUSA Partnership in March 2023.
UPS President of Global Government Affairs Michael Kiely told JAXUSA, the economic development division of JAX Chamber, that the parcel delivery and logistics company’s expansion in Jacksonville came down to workforce and “location, location, location.”
“Florida is one of the fastest if not the fastest-growing state in the country. Jacksonville is one of the fastest-growing parts of the state. And that’s where our investment dollars are going to go,” Kiely told the audience at the JAXUSA meeting March 28, 2023.
“Whether it be businesses or residents that are purchasing goods, we need to make sure that we have the assets and the resources to get them to you.”
At the time, Kiely said UPS employed about 4,500 people in Jacksonville.
In August 2020, UPS agreed to create 240 jobs as part of an economic development agreement with the city for the multiphase $138 million expansion of its $334 million package delivery hub renovation.
Jacksonville City Council approved a Recapture Enhanced Value Grant of $6.8 million, based on 50% of the increase in real and personal property taxes generated at the project site for five years.
According to Kiely, UPS was able to double the size of its throughput at its Jacksonville facility to 1.2 million packages per day, mainly through automation technology and hiring more Class A drivers to handle the increased volume.
Kiely said the UPS strategy to give a single division the responsibility of running airplanes and trucks and coordinating with trains, including Jacksonville-based CSX Corp.’s intermodal hub, allowed the parcel service to avoid some of the global seaport congestion and pandemic-related supply chain backlog.
Kiely said UPS’s ability to quickly secure air transportation from Europe and Asia to the U.S. and leverage relationships with ocean carriers gave them a strategic advantage during the pandemic to meet its shipping demands despite supply chain issues causing a backlog at some major U.S. ports.
UPS intended to implement Radio Frequency Identification tracking label technology companywide by the end of 2023 to give customers real-time GPS tracking of its shipments, Kiely said.
Amazon, tariffs and more
SeekingAlpha.com posted a transcript of company leaders’ April 29 conference call with analysts.
UPS CEO Carol Tome said during the call that in January, UPS announced three strategic actions “to drive our business to a more profitable, agile and differentiated UPS.”
“You’ll recall that we reached agreement with Amazon to reduce their volume in our network by more than 50% by June of 2026. Note that the volume we are transitioning out is Amazon’s fulfillment center outbound volume. This volume is not profitable for us, nor a healthy fit for our network,” Tome said.
“The Amazon volume we plan to keep is profitable and it is healthy volume. In other words, volume where we can add value like returns and seller fulfilled outbound volume.”
The other two strategies were handling all of its UPS SurePost products and reconfiguring its U.S. network with “efficiency reimagined” initiatives to save about $1 billion.
Tome told analysts UPS will lessen its dependency on labor, reduce capital requirements needed to run the network and drive structural operating margin and return on invested capital improvements.
“While this may be the largest network reconfiguration in our history, we’ve got experience that gives us confidence that we will be able to complete our plans with very little customer disruption and at the right cost to serve.”
Tome said UPS closed 11 buildings in 2024, “and the learnings from those closings became the blueprint for our network reconfiguration approach. We are moving very quickly. In this first phase, we will complete 164 operational closures, including 73 building closures by the end of June. And there’s more to come.”
Tome said while the building footprint is changing, its pickup and delivery footprint is not.
“We’ll just do it with fewer buildings. For our larger customers, we are working with them to update their operating plan.”
The initiatives are expected to end in 2027.
Impact of tariffs
Tome also addressed tariffs, “and our approach to managing through what is turning out to be a very complex and ever-changing topic.”
“In the U.S., we’ve talked with our top 100 customers to understand how their business is being impacted, both directly and indirectly by changes in trade policy. These customers have told us that they are exploring various options to address the tariff, from absorbing the cost to pushing them into retail prices to asking suppliers to help defray the expense. At this point, it remains an open question as to what path they will choose and what the potential impact could be on consumer demand and our business.”
Tome said UPS interviewed nearly 45,000 international and freight forwarding customers. More than 95% of small package shippers said they expect to maintain their current business models, while the rest are considering several options, including trade shifts, transportation mode shifts, or exiting the business.
“Most of these customers are also telling us that they are letting inventory levels sell-off, which will lead to lower shipping activity, at least for now. Freight forwarding customers are telling us that, where they can, they are looking to move from air freight to ocean freight.”
Tome said the macro environment may be uncertain, “but with our actions, we will emerge as an even stronger, more nimble UPS.”