UPS
The voluntary redundancy scheme, which recently cleared a federal court challenge from the Teamsters union, is part of a 2026 plan to cut 30,000 roles. (PHOTO: Marques Thomas/Unsplash )

UPS is moving to decouple from its largest partner as it extends a record-breaking $150,000 (£112333.50) buyout offer to more than 100,000 delivery drivers. This massive redundancy scheme, launched last week, marks the final stage of a 2026 restructuring plan to move away from low-profit Amazon shipments.

By slashing its daily volumes by millions, the shipping giant intends to swap its reliance on the e-commerce leader for a leaner, more automated business model.

The shipping giant reached out to over 100,000 delivery staff last week with a voluntary redundancy deal valued at $150,000 (£112333.50), marking an unprecedented move for the firm. These notifications were issued following a federal court's decision to reject a legal challenge from the Teamsters. The union had attempted to block the initiative, claiming the payout scheme breached the terms of their existing employment agreement with the company.

Following the court's decision to allow the buyout, the shipping giant is ready to begin the last stage of a plan to overhaul its operations. While the union estimates that 10,000 staff members may take the offer, the move allows the business to scale back and reduce its reliance on Amazon as a self-sufficient Supplier. Although the online retailer is still its largest client, the firm is focused on shifting away from this partnership to better align its resources.

Shifting Gears as Amazon Moves Logistics In-House

Zachary S. Rogers, associate professor of supply chain management at Colorado State University, told Retail Brew that the e-commerce giant is increasingly handling its own logistics and transportation. 'Amazon is doing a lot of its own trucking these days, a lot of its own delivery,' Rogers noted.

He suggested that the shipping firm recognise a need to become more efficient, stating, 'And I think it's clear to UPS that they need to get a little bit leaner, and this buyout seems to be the way they're going about that.'

The 'Glide-Down' Strategy to Slash Delivery Volumes

Last year, the shipping giant revealed a strategy to slash its Amazon delivery volume by half within 18 months. Since that announcement, the company has successfully reduced its daily workload by roughly 1 million packages. Throughout 2026, the firm expects to remove a further 1 million items per day from its network.

The financial effect of this shift is already clear, with average daily volumes in the US dropping by 2.4 million items, or 10.8%, during the fourth quarter. CFO Brian Dykes explained to shareholders last month that half of this decrease was caused by the Amazon 'glide-down' and from 'deliberate actions to remove lower-yielding e-commerce volume from our network.' These figures highlight the scale of the company's effort to move away from less profitable shipping contracts.

Prioritising Profit Over Package Volume

The benefit of this move is a reduction in wage expenses, which Dykes noted the firm intends to achieve through 'attrition' via voluntary redundancy schemes such as the current buyout.

This approach aligns with comments from CEO Carol Tomé when the separation was first announced. While the online retail giant is the company's biggest client, Tomé pointed out that 'Amazon is our largest customer, but it's not our most profitable customer. Its margin is very dilutive to the US domestic business.'

From the viewpoint of the e-commerce leader, Rogers explained that moving more of its transport operations in-house provides better oversight of its core promise: next-day and same-day arrivals.

'Not that UPS isn't a good partner,' he said, 'but when they're relying on somebody else, they don't have control of that interface between themselves and the consumer.'

Navigating Union Protections and Automation

Rogers noted that these circumstances clarify why the shipping firm chose the buyout path, 'because the Teamsters union is pretty good at protecting their employees and collective bargaining.' He explained that due to these strong protections, 'it's tough to just get rid of a bunch of union folks.'

Furthermore, the e-commerce leader has resisted union efforts in its delivery operations, even as 70% of staff at the shipping giant are union members. Mike Hosted, VP of sales and marketing at ATBS, a firm providing business services to the transport industry, told Retail Brew that this difference affects savings. When looking at ways to lower expenses, Hosted noted that 'Amazon can do that a lot cheaper than a union-based company like UPS.'

Building a Technology-Driven Future

Both Amazon and UPS are adopting automation across their transport networks, setting the stage for a major change in the sector's staffing needs. For instance, the delivery firm boosted the share of automated package processing in the US from 66.5% to 68% in 2025. This year, the company intends to 'further automate our network,' according to Tomé. These investments signal a long-term move towards a more technology-driven operations model.

Rogers suggested that this type of spending on a more intelligent, adaptable network may be vital for the firm to thrive after its partnership with Amazon ends. He pointed out that while that specific contract is winding down, other opportunities remain available. 'Just because they lose Amazon doesn't mean there's nobody else out there,' he said, adding, 'There's stuff to move, and there's warehouses that need to be filled.'

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