UPS Automates to Tackle Competitive Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 29 2026
0mins
Should l Buy UPS?
Source: Fool
- Network Reduction Strategy: UPS is downsizing its U.S. facility network to address the decline in Amazon package volume, which, while hurting revenue in the short term, allows for significant cost savings by eliminating high maintenance expenses associated with older facilities.
- Automation Deployment Impact: To date, UPS has implemented various automated systems across 127 facilities, with 57% of packages processed through automated facilities in 2023, a figure expected to rise to 68% by the end of 2026, significantly lowering per-package handling costs.
- Layoff Plans: UPS plans to cut 48,000 positions in 2025 and another 30,000 in 2026, primarily through attrition and a voluntary separation program for full-time drivers, aligning workforce size with increased operational efficiency from automation.
- Long-Term Growth Outlook: Although UPS's revenue is declining due to the reduction of low-margin packages, the automation strategy is expected to lower costs, with analysts projecting adjusted earnings per share of $7.12 by 2026, indicating potential for future growth and margin expansion.
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Analyst Views on UPS
Wall Street analysts forecast UPS stock price to rise
19 Analyst Rating
9 Buy
9 Hold
1 Sell
Moderate Buy
Current: 98.180
Low
80.00
Averages
107.06
High
126.00
Current: 98.180
Low
80.00
Averages
107.06
High
126.00
About UPS
United Parcel Service, Inc. provides a range of integrated logistics solutions for customers in more than 200 countries and territories. Its U.S. Domestic Package segment offers a range of United States domestic air and ground package transportation services. Its air portfolio offers time-definite, same-day, next-day, two-day and three-day delivery alternatives as well as air cargo services. Its ground network enables customers to ship using its day-definite ground service. UPS SurePost provides residential ground service for customers with non-urgent, lightweight residential shipments. Its International Package segment consists of small package operations in Europe, Indian sub-continent, Middle East and Africa, Canada and Latin America and Asia. It offers a selection of guaranteed day- and time-definite international shipping services. Its supply chain solutions consist of forwarding, logistics, customized third-party logistics and specialized cold chain transportation solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Future Commitments: UPS has agreed not to pursue any other severance programs during the current Teamsters National Master Agreement, effective until July 31, 2028, indicating stability and transparency in labor relations.
- Job Cuts and Facility Closures: The company plans to cut up to 30,000 jobs and close 24 facilities this year as part of winding down its partnership with Amazon, reflecting strategic adjustments in response to market changes.
See More
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- Severance Compensation Details: Under the agreement, eligible employees will receive up to $150,000 in early retirement payments, applicable to long-haul feeder drivers and Regular Package Car Drivers across all regions, reflecting the company's commitment to its workforce.
- Limit on Severance Plans: UPS has agreed not to pursue or introduce any other severance programs during the current Teamsters National Master Agreement, which is effective until July 31, 2028, ensuring job stability and security for employees.
- Total Severance Cap: The settlement caps the total number of severance payments at 7,500 drivers nationwide across all job classifications, demonstrating the company's balance between cost control and maintaining employee relations.
See More
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- Federal Reserve Nomination: Trump's nominee Kevin Warsh is set for a Senate Banking Committee hearing on April 16, despite a separate criminal probe into the Fed, indicating a complex economic policy landscape under the Trump administration.
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