UPS Plans to Offer Voluntary Buyouts to Union Drivers
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UPS Inc. plans to offer voluntary buyouts to union-represented delivery drivers for the first time in the company’s history as part of an effort to boost profit by slimming down its operations.
Drivers would receive “a generous financial package if they choose to leave UPS,” in addition to any earned retirement benefits, including pension and health care, the company said in a statement July 3.
UPS ranks No. 1 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, and UPS Supply Chain Solutions is No. 5 on the TT Top 100 list of the largest logistics companies. The company also ranks No. 3 on the TT Top 50 list of the largest global freight carriers.
The Atlanta-based courier is carrying out a sweeping plan to shrink its network to improve efficiency in response to a decline in parcel volumes following a pandemic-driven boom in e-commerce. It’s also navigating industrywide challenges posed by President Donald Trump’s tariffs, which have complicated cross-border goods shipments and choked off key global shipping lines.
The decision to offer unionized drivers buyouts reflects the “unprecedented business landscape,” the company said. UPS did not specify how many employees would be offered the package or when it plans to make the proposal.
UPS’ shares fell 1.3% during a shortened trading session in New York on July 3. The stock has declined more than 17% this year, trailing the S&P 500 Index’s 6.8% advance.
The company in April said it was planning to reduce its operational workforce — a group that includes delivery drivers and package handlers — by 20,000 workers this year and close dozens of facilities in response to lower package volumes from its largest customer, Amazon.com Inc. UPS earlier this year disclosed plans to slash its volume from the online retailer by more than half over 18 months, a swift decision that unsettled Wall Street.
Amazon.com Inc. ranks No. 1 on the TT Top 100 logistics list, No. 12 on the private list and No. 1 on the Top 50 global freight list.
The buyout plan was initially announced by the International Brotherhood of Teamsters, the union representing UPS drivers and warehouse workers, which strongly criticized the initiative as a “corporate scheme that will directly violate the union’s national contract.”
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UPS said it has approached the Teamsters about the buyout offer and that it remains committed to the agreement it reached in 2023 as part of negotiations with the union.
The company’s current labor contract, which provides for substantial wage increases and other benefits, is nearing its second anniversary. Costs associated with the agreement were largely front-loaded, weighing on UPS profit margins in recent years as the company contended with declining demand.
The union is encouraging its members ignore and reject the plan, a Teamsters spokesperson said.
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