UPS and Amazon Rethink Employee Numbers

Amazon.com, Inc. (NASDAQ: AMZN) and United Parcel Service, Inc. (NYSE: UPS) find themselves at a crossroads in early 2026. These two giants of delivery and e-commerce built empires on the surge of online shopping during the pandemic years. Orders poured in, packages stacked up, and hiring ramped up to meet the demand. Now, with that frenzy fading, both companies confront a quieter reality. Customers order less frequently, and businesses look to steady their costs. This shift prompts real questions about how many people these operations truly need.

Think back to 2022. Amazon launched what it called a turnaround plan, a broad effort to sharpen its edges after years of rapid expansion. The goal seemed straightforward: cut excess spending, simplify internal processes, and boost returns for investors. UPS followed a similar path, adding drivers and warehouse staff when packages flew off virtual shelves. Fuel costs soared, labor shortages bit hard, and everyone adapted on the fly. Fast forward to today. E-commerce growth has cooled to about 5% annually, down from double digits just a few years ago. Retailers report fewer impulse buys, and consumers hold onto their wallets amid economic uncertainty. For UPS and Amazon, this means rethinking the workforce they assembled at peak times. 

UPS announced plans to eliminate around 20,000 positions, or roughly 12% of its workforce. These cuts target areas like corporate offices and non-driver roles, sparing frontline package handlers for now. The company cites softer demand for small parcel deliveries, a segment hit hardest by the e-commerce slowdown. Revenue from this area dropped in recent quarters, squeezing margins that once benefited from volume surges. UPS leaders point to network overcapacity as a core issue. They built extra sorting facilities and hired aggressively when daily volumes topped 25 million packages. Today, averages hover closer to 22 million, leaving facilities underutilized and labor costs out of line with income.

Amazon tells a parallel story. The company decided to unwind parts of its 2022 turnaround initiatives. Those efforts included trimming management layers and closing underused warehouses. Yet, as growth stabilized, Amazon realized some changes went too far or missed the mark. Executives now aim to bring back certain teams focused on long-term projects, like advanced robotics in fulfillment centers. Still, the broader picture involves fewer overall staff. Amazon’s headcount peaked at over 1.5 million globally in 2023. By late 2025, it dipped below 1.3 million, reflecting both voluntary exits and targeted reductions. The focus shifts to automation, where machines handle repetitive tasks more reliably than humans in high-volume settings. 

What drives these moves? Start with the customer. Online sales growth, once a rocket, now crawls along. In the U.S., holiday seasons that used to break records fell flat in 2025, with total e-commerce up just 4% year-over-year. Global trade tensions add pressure, as tariffs and supply chain snarls raise costs for imported goods. UPS, with its heavy reliance on ground transport, feels this acutely. Fuel prices remain volatile, stuck around $3.50 per gallon for diesel. Amazon, meanwhile, juggles its vast marketplace. Third-party sellers, who drive much of its volume, cut back on promotions to preserve profits. Fewer deals mean fewer orders, and thus fewer packages to ship.

Workers face uncertainty in this environment. UPS drivers, protected by strong union contracts, hold steady for now. But administrative staff in Atlanta headquarters brace for changes. Amazon warehouse associates in places like Kentucky and California see shifts toward temp roles or automation pilots. Both companies offer severance packages, typically 60 days pay plus benefits extension, to ease transitions. Critics argue these cuts overlook the human element. Employees who joined during boom times now seek new paths in a job market favoring skills in tech or trades. Yet company leaders frame it as necessary adaptation. UPS aims to save $1 billion annually post-cuts, channeling funds into electric vehicles and route optimization tech. 

Technology plays a starring role here. Amazon invests heavily in AI-driven forecasting to predict order volumes with 95% accuracy. UPS tests drone deliveries in rural areas, potentially reducing truck miles by 10%. These tools promise efficiency without endless hiring cycles. Rivals like FedEx watch closely, with their own staff reviews underway. The sector as a whole learns a lesson: scale for peaks, but plan for troughs. Business channels track these stories because they reveal broader patterns in how companies balance growth with reality.

Labor markets evolve alongside. Unemployment in logistics hovers at 4.2%, above the national 3.8% average. Retraining programs gain traction, with Amazon’s Upskilling 2025 initiative already placing 300,000 workers into higher roles. UPS partners with community colleges for certifications in EV maintenance. These efforts soften the blow, turning layoffs into opportunities for some. Investors react calmly. UPS shares hold steady post-announcement, while Amazon trades near 2025 highs on cloud computing strength.

Both companies emerge leaner, ready for whatever comes next. Whether demand rebounds with summer travel or economic headwinds persist, their actions set a template for corporate America. Flexibility defines success in this era, as leaders weigh people, profits, and progress in equal measure.