Coyote Logistics, a wholly owned subsidiary of UPS Inc. (NYSE: UPS), is expected to announce Friday that it will lay off approximately 200 people, according to people familiar with the matter.
It was not immediately clear where the layoffs will occur. At the end of January, rumors spread that layoffs would be concentrated on Coyote’s Large Enterprise operations teams, the staff who are dedicated to Coyote’s largest shipper accounts. Significantly lower truckload volumes at Coyote, which sources said dropped from over 8,000 non-UPS loads per day to approximately 6,100 non-UPS loads per day over the past year, meant that operations teams were underutilized.
But sources spoke to FreightWaves about a conflict between Coyote and UPS management regarding which employees would be terminated, delaying the layoff until Feb. 16. The first list that Coyote’s middle managers generated was adjusted and broadened to conform to UPS’ diversity, equity and inclusion mandate that underrepresented groups were not to be disproportionately impacted by the cuts. “Low performers” across all divisions, not limited to mostly Large Enterprise, will be affected by Friday’s cut, with an emphasis on non-revenue-generating cost centers like IT and operations.
In 2015, UPS acquired Coyote for $1.8 billion, about one times revenue that year. Since then, Coyote has doubled in size, with estimated 2022 revenue of $3.8 billion. Coyote’s revenue story hasn’t always been up and to the right, though: 2022 revenue was markedly lower than 2021’s $4.7 billion.
In the past several years, UPS corporate management has made a series of changes to the brokerage, including reducing incentive-based compensation, removing carrier reps’ visibility into their margins per load and aggressively enforcing noncompete clauses — even against non-revenue-generating employees like carrier reps — in an attempt to reduce churn and control costs.
In 2020, Coyote laid off 55 people — 30 IT workers from its Chicago headquarters and 25 carrier representatives at its Chattanooga office.
The layoffs at Coyote come at a time of widespread reductions in head count across the transportation and logistics industry. On Thursday, digital freight platform Convoy announced it will be restructuring, leading to an undisclosed number of layoffs. Last November, C.H. Robinson laid off about 650 employees as a part of a cost-saving measure pushed by activist investors that ultimately led to the ouster of CEO Bob Biesterfeld in January. Later in January, Uber Freight laid off approximately 150 employees, about 3% of its workforce.
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Anon
@NathanH — One issue has nothing to do with the other. But go off I guess…..
Nathan H
Hopefully they can start paying detention now with this reduction in head count
BL Pope
Great lesson on how to take a boiler room type business model and make it more toxic
anon
To Frank Hammond’s comment – Jeff Silver has not run the company in several years
Bar Kokhba
Coyote held internal talks all thru quarter four talkng about how much profit they made in 2022, how it was one of the best years ever, then turned around and changed their work from home policy to require everyone to come in office more often. Then the day everyone was working from home they announced the layoffs while talking about transparency – screams greed.
Frank Hammond
So, after hearing for many years that Coyote was the greatest company ever created – it turns out that wasn’t true? Jeff Silver is not the smartest man on the planet?
Sandhu Singh
Doesn’t look good when one of UPS’/Coyote’s “top dogs” are leaking this sort of info. What’s going on over there?
Gavin Larsen
DEI requirements strike again. “The first list that Coyote’s middle managers generated was adjusted and broadened to conform to UPS’ diversity, equity and inclusion mandate that underrepresented groups were not to be disproportionately impacted by the cuts.”
What does this even mean?