United Parcel Service this year plans to close 22 package sortation centers with union employees in 18 states, including facilities in Dallas, Miami, Baltimore and Atlanta, according to court documents filed last week.
It is the first time UPS (NYSE: UPS) has publicly disclosed which locations it intends to shut down this year as part of an aggressive strategy for network consolidation and automation aimed at improving profitability by better matching capacity and labor with lower parcel volumes. UPS is on track to decouple 50% of its business with Amazon, its largest customer, by June because the deliveries are not profitable and also recently agreed to outsource last-mile delivery to the U.S. Postal Service for certain economy shipments.
The optimization plan, called Network of the Future, envisions closing 200 sortation centers over five years. Last year, UPS reduced 48,000 frontline jobs and closed 93 owned and leased distribution centers.
Chief Financial Officer Brian Dykes said on a Jan. 27 earnings call that UPS would close 24 facilities in the first half of the year and eliminate 30,000 jobs. Twenty-two of those locations have union-represented employees, according to exhibits submitted in connection with a Teamsters union lawsuit against the company’s plans to reduce its driver workforce through buyouts.
“A total of 22 facilities with bargaining unit employees have been identified for closure in 2026. The applicable Local unions have been notified of these closures and informed of the anticipated impacts, in accordance with Article 38 the national master agreement. At this time, no additional closures are planned,” Daniel Bordoni, president of global labor relations at UPS informed Teamsters General President Sean O’Brien in a letter dated Jan. 30 and included as an exhibit in the job case before a federal district court in Massachusetts.
The correspondence includes a list of the 22 locations slated to close (see below).
Dykes said UPS plans to reduce warehouse workers through attrition and delivery drivers through a buyout, but the company said in court documents that it could resort to involuntary layoffs if not enough drivers take the severance package being offered. Employees who are laid off are typically offered positions in other locations, but many end up quitting because the new facilities are far from their current home.
UPS intends to offer $150,000 plus accrued benefits to more than 100,000 drivers as an enticement to resign. The payout amount is not tied to seniority levels. The Teamsters union is fighting the voluntary separation program in court, claiming it violates the contract by changing employment status without union consent and prevents workers from seeking any redress if they sign walking papers.
A consolidated building footprint will have fewer routes and require fewer drivers.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at ekulisch@freightwaves.com.
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