For the first 30 or so months of her tenure, UPS CEO Carol B. Tomé had the wind at her back. For the past year, however, a gale force storm has been blowing right at the company. The question is whether she can steer Big Brown through an environment bereft of tailwinds that may have spawned a false sense of security.

From mid-2020 to early 2023, UPS (NYSE: UPS) fired on all cylinders, propelled by massive and unsustainable spikes in delivery demand from the pandemic, fat rate and yield increases, big operating margins, unprecedented dividend hikes, and relatively muted competition. A legacy Teamsters contract that took effect in 2018 enabled UPS to sidestep much of the post-COVID labor cost inflation that hit its chief rival, FedEx Corp. (NYSE: FDX). Business was so good that UPS could afford to cap volumes from large enterprise customers, even telling them to look elsewhere for capacity.

Wall Street loved it. UPS shares, which traded at $103 a share in mid-February 2020, climbed to $224 in less than two years, a stunning ascent for a mature company in cyclical, low-margin businesses like transportation and logistics.

The second version bears no resemblance to the first. Volumes have reverted to the mean, receding to pre-pandemic levels. Flat demand and overcapacity has stripped UPS and other carriers of pricing power, a scenario that will likely extend through 2024 and beyond. Business that UPS may have turned away two years ago is now being heartily welcomed. “We’re now seeing UPS seek package volumes with a desperation unlike anything we’ve ever seen,” said Rob Martinez, founder and chairman of Shipware LLC, a parcel consultancy.

Other headwinds subsumed the prior tailwinds. A new Teamsters contract ratified last August burdened UPS with onerous cost increases in the pact’s first year. Amazon.com. Inc. (NASDAQ: AMZN), UPS’ largest customer, formed a stand-alone shipping service with designs on higher-margin small to midsize businesses that UPS covets. The U.S. Postal Service rolled out a two-to-five-day delivery service called Ground Advantage that competes with UPS on the ground. A bevy of last-mile providers sprang up to deliver low-priced goods moving through fast-growing Chinese retailers Shein and Temu. That means less business for UPS and other incumbents.

UPS’ results clearly indicate that parcel carriers are no longer able to influence demand for their services, said Satish Jindel, founder and president of ShipMatrix, a consultancy. “Gaining volume in a flat market requires lower prices to take market share from other carriers, and that is tough as those carriers will seek to protect their volume,” Jindel said.

UPS can gain volume and revenue but will need to sacrifice profit margin in the process, according to Jindel. UPS is “caught between a rock and a hard place, and this market dynamic will not ease for [the] next two or even three years,” he said.

Given this very different set of circumstances, Wall Street has taketh what it had previously giveth. As of Thursday, UPS shares traded at $142.41 a share.

UPS did not respond to a request for comment about this story.

The turbulence of the past three-and-a-half years may have come to a head on Tuesday when UPS released weak fourth-quarter results whose saving grace was that they were an improvement over the low-water mark of the third quarter. Every metric was down year over year. The first half of 2024 will also be subpar, especially the current quarter when labor costs remain elevated, industrywide volumes continue to be flat, and the company faces tougher comparisons from the 2023 quarter. In response, the company said it would eliminate 12,000 management and contract jobs, a move that could result in nearly 14% of all managerial jobs going away but could save about $1 billion in 2024 alone. (Ironically, FedEx almost a year to the day made management cuts that ended up being similar in size.)

Even the relentlessly optimistic Tomé could not spin the 2023 saga, calling it “unique, difficult and disappointing.” Earnings improvement will be a second-half story, the company said, as labor cost pressures ease, inflation in general continues to drop, and management cost reductions take effect. At projected volume gains hovering around 1%, a brighter outlook will likely not come from higher demand.

The projected staff cuts are not new news in the Tomé era; in the second half of 2020, more than 11,000 nonoperations middle management employees were offered voluntary separation packages. However, the cumulative effect of the multiyear reductions, while valid to the extent that it shrank executive bloat, has raised questions about the hollowing out of a management philosophy that set UPS apart from most organizations and played a key role in its vaunted operational execution. There are also concerns that the “better, not bigger” mantra that undergirded Tomé’s efficiency drive may have cut too much muscle along with the fat.

Josh Taylor, a former UPS executive who today monitors the company for Shipware as its senior director of professional services, said he’s heard about service concerns from a handful of UPS customers. “UPS’ service challenges could stem from its aggressive cost cutting,” Taylor said in an email. “In the past, UPS had planned redundancies to ensure excellent service despite the inevitable hiccups in the network.” Those backup systems have thinned out, he said.

In addition, UPS’ decision to eliminate money-back guarantees on ground deliveries at the start of the pandemic allowed it to reduce planned redundancies without worrying about the consequences of forking over millions of dollars in refunds, according to Taylor. At the same time, UPS’ operating teams “haven’t been given any wiggle room in their planned performance, so we’ve started to see sporadic corner-cutting measures like missed pickup scans,” he said.

According to one source, a former UPS sales executive, the company’s sales force is being “required to do more work than ever.” This includes filing daily reports on all sales-related activity and making a minimum of six in-person visits per day, the source said. “This is causing a strain on many in UPS’ sales force, which is less tenured than it has been in recent decades due to previous downsizing of many high-producing, knowledgeable, and tenured employees,” the source said.

The cuts have sparked more than a few social media missives from current and former UPS employees, a remarkable development for an organization where public dissent has historically been absent.

“There is a massive amount of culture and knowledge that has walked out the door over the last five years and the only people who seem to care are those that are no longer there for the firm,” Scott Lord, who spent more than 18 years at UPS, almost all in marketing director roles, wrote on LinkedIn. Lord now runs his own consulting firm.

Mike Mangeot, who retired from UPS after 30 years in various communications roles, was equally blunt, saying current leadership’s promise of a transformation that would spawn a better UPS “has not emerged.” Recent initiatives have “gutted a generation of good, productive employees who knew how to run” the company, Mangeot wrote on LinkedIn.

The cuts, according to Mangeot, should be focused on senior management at UPS’ Atlanta corporate headquarters. “There are layers of high-dollar presidents and vice presidents whose activities have little to do with running the daily business or achieving business goals,” he wrote on the platform.