The world’s largest parcel delivery company, United Parcel Service, has revealed its plans to lay off 12,000 employees and investigate strategic options for Coyote, its unstable transportation brokerage business.
This is as the company’s full-year revenue prediction fell short of Wall Street’s projection.
Shares of Atlanta-based UPS tumbled 8% to $145.32 on the New York Stock Exchange amid weak demand from its retail, manufacturing and high-tech customers.
On a conference call with analysts, the CEO, Carol Tome said the company plans to cut $1 billion in costs as it comes off a “difficult and disappointing” year, when volume, revenue and operating profit declined in all of its business segments.
Tome also said UPS hopes to find a new way to offer the “very low-margin” services that Coyote provides without the overhead.
Coyote’s revenue topped $4 billion during the height of the COVID-19 pandemic shipping boom, but “it’s come way down since then,” she said.
UPS, seen as a bellwether for the global economy, does not expect business conditions to improve until the second half of 2024. On Tuesday, it forecast full-year revenue of $92 billion to $94.5 billion, below analysts’ average target of $95.57 billion, according to LSEG data.
UPS, FedEx and other delivery firms boomed in the early days of the pandemic, when home-bound consumers binged on everything from furniture and exercise equipment to sweat pants and televisions.
That trend reversed when travel, concerts and indoor dining resumed, and the resulting drop was exacerbated by inflationary pressures that crimped some e-commerce purchasing.
Both UPS and FedEx have been forced to cut forecasts in the still-uncertain business environment.
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