News April 30, 2025 0 Comments

UPS Layoffs Amazon: Over 20,000 Jobs Reduced Due To Trade War

President Donald Trump’s trade war continued to reverberate through the corporate world on Tuesday as UPS said it would cut 20,000 jobs to lower costs and automaker GM pulled its outlook and delayed its investor call by two days pending possible changes to U.S. trade policy.

The moves are further evidence of how Trump’s chaotic trade policy is taking a major toll on companies’ ability to plan beyond the near term. About 40 companies worldwide have pulled or lowered their forward guidance this first quarter earnings season.

They include American ketchup maker Kraft Heinz, Swedish appliances maker Electrolux, and automaker Volvo, all of which have either slashed their 2025 outlooks or abandoned them altogether. Treasury Secretary Scott Besant on Tuesday tried to reassure consumers and investors by noting that Trump would announce cuts to planned auto parts tariffs to avoid double duties on parts and materials.

He also touted the administration’s plans to cut taxes and reduce regulation to boost confidence. The tax bill is moving forward. It is going to give permanence to the 2017 Tax Cuts and Jobs Act, which will go back to the question on certainty. It will give American business certainty. It will give American people certainty.

But executives are increasingly alarmed over how Trump’s vacillating trade policies have sapped consumer and business sentiment, raising fears that even if tariffs are rolled back substantially, the damage done will not be easily reversed. The turmoil led UPS CEO Carol Tomei to say on her company’s earnings call Tuesday that, quote, the world has not been faced with such enormous potential impacts to trade in more than 100 years.

UPS, in our view, is and has been doing the things to kind of restructure its network to deal with the the realities of their business and how much it’s changed uh over over the last couple of years. And they’re also focusing a lot more on revenue quality.

So that would mean trying to win more share of small uh to mid-size uh shippers also you know, you noted uh they’re kind of gliding down, if you will, their exposure to Amazon, to some of their businesses, that just doesn’t make sense. I mean, they’re still going to do returns for Amazon, which is a good business for UPS from a margin financial standpoint.

Hey Lee, what kind of visibility does UPS have on their revenue stream? Like how much is contracted versus how much is just me walking up to a store and, you know, shipping a package across the country? That’s a great question, Paul.

UPS said it would cut 20,000 jobs to lower costs

I think the reality is that they have somewhat a decent visibility into their business a couple of out. I think that’s really about it. That’s just really because their customers are really driven by economic activity. And it’s really tough to kind of really gauge those volumes, especially in the current environment, given the uncertainty driven by tariffs.

Which is why earnings expectations for the second quarter will probably start moving lower as sell side analysts adjust their models. But in theory, if we put aside the macro for a second, I appreciate you said two thirds of it is macro, but the stuff is a good thing for them long term, right? Even though there’s near term pain, like those are lower margin packages that they don’t wanna do anymore. They’re gonna focus on higher margin packages that could wind up being much more stable and profitable, right?

Yeah. And I actually, know, said 95%. So I was a little more focused on, you know, us thinking that the majority of the shortfall in the 2Q is really the macro. But yeah, to your point, they are really focusing on revenue quality. You know, They mentioned on the call that some of their business out of Amazon fulfillment centers just really wasn’t profitable for them.

So it obviously doesn’t make sense to take that business. And if they’re able to create capacity by getting rid of some of this business and filling it with what they call SMB, small to mid-sized businesses, You know, that’s going to be a good thing for its margins overall. And it’ll allow them to generate the kind of returns that they can reinvest in their network.

Because, you know, while they’re doing a lot of investing now in automation and they’re closing some facilities just to be a little more nimble than they were in the past, you know, they’re still going to continue to have to make those investments because technology continues to change. And those benefits, you know, will need to be driven by those investments.

Lee, a lot of companies are saying they’re not seeing the impacts of tariffs now, but they certainly expect to in the coming weeks and months. You cover everything in shipping, rails, trucks, the ocean shippers, the air freight guys. You cover it all. Are you seeing it now?Because I’ve actually seen some reporting over the weekend that maybe fewer ships are sailing from China to the U.S. Are you seeing it anywhere in your space?

UPS Layoffs Amazon

Yeah, we are. And to your bookings from China to the U.S. are down 30 to 40 percent, depending on which press reports you read. You know, some of that is obviously there was a pull forward effect in our view before the tariffs were going into place. So people were rushing to get stuff out. So we don’t know really where that’s going to lie. You know, shippers are going to either they’re going to take out. the stance where they’re going to be like they’re going to sit back and wait to see what happens.

Some are continue to do business as usual and they’re just going to try to push off the costs associated with tariffs to customers, which obviously will be inflationary or a mix of the two. So really, you know, it’ll be interesting to see how things progress. And at the end of the day, we might wake up tomorrow morning. There’s no tariffs. Right. So who the heck knows?