UPS Gets Court Approval for $150K Driver Buyouts: Will This Ease Cost?

Core Insights - United Parcel Service (UPS) is proceeding with $150,000 buyout offers for certain drivers after a federal judge dismissed the International Brotherhood of Teamsters' attempt to block workforce reductions [1][4][9] - UPS plans to eliminate up to 30,000 operational jobs and close multiple facilities by 2026 as part of its restructuring efforts to reduce reliance on Amazon deliveries and focus on more profitable business areas [2][4][9] - UPS has agreed to cut its shipment volume with Amazon by over 50% by June 2026, as Amazon is not considered its most profitable customer [3][4] Company Actions - UPS intends to provide additional details regarding the buyout packages to drivers in the coming days following the court ruling [4] - The company is responding to an 8.6% decline in package volumes last year, which is expected to continue into 2026 due to the shift away from low-margin Amazon shipments [4][9] Competitive Landscape - FedEx is also implementing cost-cutting measures, including its Network 2.0 initiative, to address soft demand and improve operations [5] - FedEx's DRIVE program has generated $1.8 billion in permanent savings in fiscal 2024 and an additional $2.2 billion in fiscal 2025, with expectations of achieving $1 billion in savings for fiscal 2026 [6] Market Performance - UPS shares have increased by over 31% in the past six months, although the company has underperformed compared to its industry during the same period [7] - UPS currently trades at a discount to industrial levels based on the 12-month forward price-to-sales ratio [11] Earnings Estimates - The Zacks Consensus Estimate for UPS has been revised downwards for the first quarter, second quarter, and full years 2026 and 2027 over the past 60 days [12]