Ai Pundit from Rahul Bhavsar

Forty eight thousand people lost their jobs at UPS this year.

The stock jumped 7 percent.

That disconnect tells you everything about how companies are rethinking what profitable work looks like. I’ve been tracking UPS’s restructuring because there are patterns here every operations leader needs to understand.

The Numbers That Changed Everything

UPS didn’t cut jobs because business was failing. Revenue hit $21.42 billion in Q3 with net income around $1.3 billion.

They cut jobs because the math stopped working.

About 66 percent of packages now move through automated sites, up 300 basis points from last year. Meanwhile, labor hours dropped nearly 10 percent through volume redirection away from manual facilities.

The company expects to hit $3.5 billion in cost savings by year end. They’ve already banked $2.2 billion.

Volume Without Margin Kills Companies

Here’s what caught my attention. UPS is cutting Amazon volumes in its network by more than 50 percent by June 2026.

Amazon is their largest customer.

But 60 percent of the Amazon business loses money. CEO Carol Tomé said so during the Q4 earnings call. Amazon isn’t their most profitable customer despite being their biggest.

The company is shifting toward small and medium businesses, which now represent 31.2 percent of total U.S. volume. Revenue per package is expected to rise 6 percent even as average daily volume drops 8.5 percent.

What This Reveals About Workforce Transformation

The restructuring included 34,000 operational roles and 14,000 management positions. Some through layoffs, others through buyouts and voluntary separations.

Automation didn’t cause the job cuts. Margin compression did.

When you’re handling volume at scale but the profit isn’t there, you face a choice. Transform operations or watch competitors with better unit economics take market share.

UPS accelerated automation rollout partly because customers temporarily shifted to competitors during Teamsters negotiations. That forced faster deployment of efficiency projects across the network.

The Framework Every Leader Needs

I see three insights from UPS’s transformation.

First, volume metrics deceive. Growing package counts while shrinking margins creates an illusion of success until the numbers stop adding up.

Second, automation enables strategic choices. The 66 percent automation milestone didn’t eliminate jobs on its own. What happened is UPS used those tools to identify which work generates sustainable profit and which doesn’t.

Third, workforce transformation follows margin analysis, not technology adoption. UPS didn’t ask “what do we automate?” They asked “which customers and operations create profitable growth?”

Where AI Agents Fit

AI Agents don’t replace workers to cut costs. They handle low-margin work people shouldn’t be doing in the first place.

The logistics sector is shifting from labor-intensive operations to AI-driven route planning, inventory management, and real-time decision-making. Companies are redeploying workers into higher-value roles while autonomous systems handle repetitive, low-margin tasks.

UPS’s transformation shows what happens when you wait too long to make these shifts. The human cost becomes severe because the business pressure becomes acute.

The Question Facing Every Operations Leader

Which work in your organization generates sustainable margin? Which work exists because there’s inertia around doing things the same way?

UPS gave us a $3.5 billion case study in answering those questions. The stock market rewarded the hard choices. Forty eight thousand people paid the price.

The real story is about redefining profitable work before market forces make the decision for you.