United Parcel Service said on Tuesday (Jan 30) it would cut 12,000 jobs and explore strategic options for Coyote, its truckload freight brokerage business, after the company forecast full-year 2024 revenue below estimates.

“The small package market in the US, excluding Amazon, is expected to grow by less than 1 per cent”, CEO Carol Tome said in a post-earnings call with analysts.

Reuters reported in October that US retailers and other delivery customers were winning discounts from UPS and rival FedEx as they seek to fill trucks amid shrinking demand.

UPS, seen as a bellwether for the US economy, expects full-year 2024 revenue in the range of US$92 billion to US$94.5 billion, below analysts’ estimates of US$95.57 billion, according to LSEG data.

Meanwhile, customers shifting to less lucrative ground-based delivery from air-based services is also piling pressure on both UPS and FedEx.

For the fourth quarter, UPS reported a 6.9 per cent decline in revenue from its international segment due to volume softness in Europe and 7.3 per cent decline from its domestic segment.

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The two segments accounted for about 86 per cent of the company’s revenue in 2023, and have declined for the last four and five quarters, respectively.

The company reported quarterly revenue of US$24.9 billion, down from US$27 billion a year earlier and below analysts’ estimates of US$25.43 billion.

Labour contract-related costs in the second half of 2023 were expected to be about US$500 million more than the company’s estimates, chief financial officer Brian Newman had previously said.

Adjusted profit fell to US$2.47 per share from US$3.62 a year earlier, but came in slightly above analysts’ estimates of US$2.46 per share. REUTERS