UPS Slashes 20,000 Jobs and Cuts Amazon Deliveries by Half: What Amazon Sellers Must Know in 2025

May 7

Written By Admin Black Bear Group

UPS is laying off 20,000 workers and halving its Amazon shipping volume by 2026. This isn't just a logistics shake-up—it signals a major shift in e-commerce fulfillment power dynamics. Here’s what every Amazon seller needs to know.

Table of Contents:

Executive Summary
What’s Happening: The UPS Layoffs & Facility Closures
Why UPS is Pulling Back from Amazon
Implications for Amazon Sellers & Agencies
What Brands Should Do Right Now

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Executive Summary

UPS has announced it will lay off 12,000 to 20,000 workers and close at least 40 sorting facilities in an aggressive cost-cutting initiative. The plan comes amid falling demand and a conscious decision to reduce its dependency on low-margin volume from Amazon, which it aims to cut by 50% or more by the end of 2026, per CFO Brian Newman.

This shift marks a new phase in the Amazon–UPS relationship—and Amazon sellers should take note.

What’s Happening: UPS Layoffs & Amazon Volume Cuts

Up to 20,000 layoffs across corporate and operational roles
40+ facilities to be consolidated or closed
Target to cut Amazon-related parcel volume by over 50% by late 2026
Move aligns with UPS’s Network of the Future transformation strategy to automate and optimize routes
UPS CFO Brian Newman cited a strategic pivot to reduce reliance on Amazon and improve margin control amid weakening consumer demand and an ongoing focus on cost-efficiency.

UPS is focusing on higher-margin customers while backing away from clients (like Amazon) that drive volume but offer limited profitability.

Why UPS Is Pulling Back from Amazon

This is part of a broader logistics reshuffling. Amazon has built out its own fleet under Amazon Logistics, now responsible for more than 60% of its U.S. deliveries, according to Pitney Bowes.

Rather than compete on Amazon’s terms, UPS is pivoting toward:

Higher-margin SMB and healthcare shipping
Efficiency through automation
Streamlining underused facilities

Implications for Amazon Sellers & Agencies

This move has a ripple effect—especially for Amazon 3P sellers, aggregators, and DTC brands using Amazon MCF (Multi-Channel Fulfillment) or UPS as a non-Amazon delivery partner.

Key impacts to watch:

Amazon will double down on internal logistics control: Expect more FBA restrictions, MCF changes, or incentives to keep sellers inside the Amazon ecosystem.
UPS rates may shift for non-Amazon sellers: As UPS pivots away from bulk Amazon business, pricing and service offerings may be restructured to serve small-to-midsize eComm sellers better—or worse.
Amazon delivery experience gaps may emerge in regions formerly covered by UPS, especially for heavy or oversized goods.

For agencies and consultants, this reshuffle could impact brand fulfillment strategies—particularly for clients trying to maintain diversified shipping across Amazon, Shopify, and Walmart.

What Brands Should Do Right Now

✅ Audit your shipping strategy
Are you overly reliant on UPS for non-FBA orders?

✅ Revisit Amazon MCF or 3PL partners
Evaluate if shifting volume to Amazon Logistics or hybrid 3PLs makes more sense heading into 2026.

✅ Prepare for Q4 stress testing
Carrier shakeups almost always impact peak season. Plan redundancies now.

✅ Watch for Amazon infrastructure changes
Expect announcements around FBA delivery SLAs, MCF fee restructuring, or regional routing updates.

The Fulfillment Power Shift

What we’re seeing is a retail logistics realignment. UPS no longer wants to be Amazon’s delivery engine, and Amazon is happy building its own.

Sellers must recognize: Amazon’s fulfillment strategy is diverging from traditional carriers. This affects not just delivery—but ad performance, CX, and eligibility for programs like Prime and SFP.

If your logistics and ads aren’t speaking to each other, you’re going to bleed margin or lose rank.

Proactive sellers will use this moment to rethink how logistics, advertising, and customer experience fit together.

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