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UPS
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The world's largest startup
During the Covid-19 pandemic, Amazon went on a hiring spree in part to meet a surge in demand for e-commerce and cloud computing services, leading its corporate and front-line workforces to more than double to 1.3 million employees between 2019 and 2020. By 2021, the company had swelled to 1.6 million employees globally, the same year Andy Jassy succeeded Jeff Bezos as CEO. Since taking over, Jassy has been trying to undo some of that work. Last week's layoff announcement, impacting 14,000 corporate jobs, is expected to be the largest in the company's history and to affect nearly every unit in the company. It marks Amazon's second round of layoffs in three years and amounts to more than 41,000 corporate job cuts since 2022, with more potentially on the way come 2026. Though AI is part of the picture, there's more at work behind the reductions. Jassy said in the days following the announcement that the changes were neither AI nor financially driven, but were instead to cut corporate fat so the company can operate as the world's largest startup. Amazon said it's not replacing workers with AI, at least not yet, but it does need to cut employees so it can invest in the technology. As those costs come down, Amazon has earmarked hefty investments in cloud infrastructure to support AI workloads while simultaneously pushing out a flurry of AI services and tools across the company. It's contributed to a rise in capital expenditures, which are now expected to reach $125 billion this year, up from a prior forecast of $118 billion. Jassy said previously that the company's workforce would shrink in the future as a result of its embrace of generative AI but it still plans to keep hiring in "key strategic areas." Over time, the company will need "fewer people doing some of the jobs that are being done today" but "more people doing other types of jobs," Jassy said in June. The cuts are also part of a larger goal of Jassy's to make the company more nimble, reduce bureaucracy and remove layers so it can operate faster and smarter. "It's culture," Jassy said during Amazon's quarterly earnings call Thursday. "If you grow as fast as we did for several years, you know, the size of the businesses, the number of people, the number of locations, the types of businesses you're in, you end up with a lot more people than what you had before, and you end up with a lot more layers."
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In January, UPS announced a major change in its strategy. The logistics firm said it was going to pare down its relationship with its largest customer, Amazon, in favor of higher-margin businesses that require fewer people to operate. In fiscal 2024, Amazon shipments represented nearly 12% of revenue for UPS. The logistics giant said it was planning to reduce that volume by more than half by June because of the relatively low margins. "This was not their ask. This was us. This was UPS taking control of our destiny," CEO Carol Tomé told analysts in January. In turn, UPS said it was pivoting to more profitable businesses, like health care, returns and business-to-business services and as a result, would require fewer resources. "As we bring volume down, we will not only reduce the hours of miles associated with this volume, we will be able to take out fixed costs to match our capacity to our new expected volume levels," finance chief Brian Dykes said in January. "We expect to close up to 10% of our building, cut back our vehicle and aircraft fleets and reduce labor." Last week the company said it had deepened previously planned job cuts for a total of 48,000 roles eliminated so far this year across operational employees and office workers. In the first half of 2025, parcel volumes were down 5.4% at UPS compared with the year-ago period, according to data from ShipMatrix, and the company has been changing its corporate structure to adjust to lower volume. The bulk of its layoffs this year, representing 34,000 operational jobs, were related to its decision to close 93 buildings – not replace people with robotics, the company said. The 14,000 additional corporate roles it cut were partially related to AI, but the technology was not the primary driver, a spokesperson said. Where AI and automation are expected to hit UPS most is in its future hiring plans. As the company plans to bring automation to more of its facilities, it won't need to hire as many people. Last week, UPS said 66% of its volume during the fourth quarter would come through automated facilities, up from 63% a year prior. That number is expected to move higher in the years ahead. Still, that doesn't necessarily mean those jobs are disappearing – some could be migrating from UPS to other companies, said Jason Miller, a professor of supply chain management at Michigan State University's business school. Miller said there's a "reallocation" effect happening where one firm is losing business and shedding payroll — while another is gaining. The number of jobs may be the same, but the location, qualities and duties can differ, he said. BLS data on the number of people employed in "courier" positions, which covers roles at places like UPS and Amazon, reflects that trend. As of August, courier positions were only down about 2% from their all-time high, and they've been on the rise over the last three years, the data shows.
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