UPS will cut 20,000 jobs because fewer Amazon packages are coming

UPS (UPS) said Tuesday that it would cut 20,000 jobs this year and shutter 73 facilities after significantly scaling back its delivery partnership with Amazon (AMZN) — previously its largest customer accounting for 12% of revenue.

The shipping giant had announced plans earlier this year to begin downsizing its partnership with Amazon. UPS’s disclosure of the coming job cuts came in its first-quarter earnings release Tuesday morning.

“Amazon is our largest customer, but it’s not our most profitable customer,” UPS chief executive Carol Tomé said earlier this year on a call with analysts. “Its margin is very dilutive to the U.S. domestic business.”

The company, which employs almost 490,000 people — 330,000 of them unionized under the Teamsters — said the job cuts are part of a broader network reconfiguration aimed at aligning its facilities and workforce with lower package volumes. Tomé said the moves were well-timed given ongoing macroeconomic uncertainty, but declined to update the company’s full-year outlook.

UPS stock was down slightly in premarket trading Tuesday.

The shipping company reported a mixed bag of results in its latest earnings report on Tuesday, notching $21.5 billion in first-quarter revenue — down slightly from last year. But it managed to grow operating profit 3.3% to $1.7 billion. On an adjusted basis, operating margin rose to 8.2%, and adjusted EPS climbed 4.2% year-over-year to $1.49. Net income came in at $1.19 billion.

Despite a drop in overall volume, U.S. domestic revenue rose 1.4% thanks to a 4.5% increase in revenue per piece and continued strength in air cargo demand. International volume surged 7.1%, lifting that segment’s revenue 2.7%, though margin pressures overseas and in supply chain solutions remained a big drag.

—Catherine Baab contributed to this article.