Dive Brief:
- UPS is offering voluntary retirement to some management employees in the U.S., a press release stated, in an effort to "reduce headcount and lower on-going operating expense."
- UPS says the redirection of resources will allow it to capitalize on growing demand in the logistics sector driven by e-commerce.
- The logistics provider reported lower operating profits in 2018 Q1 compared to 2017 Q1, in part due to higher pension expenses.
Dive Insight:
E-commerce growth isn't slowing down, and logistics providers are making every effort to streamline their operations and improve efficiency to meet the high demand.
Peak seasons have proven especially taxing on 3PLs, overwhelming them with shipments and causing delays.
The buyouts are "the first of several new initiatives," the release stated, "positioning the company to take advantage of record growth in demand for logistics services" and cope with high volumes of deliveries.
"This offer is for selected non-operations, non-union U.S.-based employees with responsibility for various support functions, including finance, marketing, sales and other indirect positions that do not directly manage day-to-day shipping operations," Steve Gaut, vice president of public relations for UPS, told Supply Chain Dive.
In offering early retirement to UPS employees not involved in daily delivery operations, the 3PL retains the workers needed to fulfill orders while also reducing its overhead costs.
UPS noted operating profit "headwinds" due to a variety of factors, including higher pension expenses. Last year, the logistics provider said it would freeze pension plans for thousands of non-union workers, in an effort to reduce deficit in retirement accounts, The Wall Street Journal reported.
This isn't the first time we've seen UPS redirect funds into its supply chain. Earlier this year, the company announced a plan to invest $12 billion in its logistics network over the next three years.
As UPS invests in its shipping services, the 3PL should be able to maintain its position as the most valuable logistics brand and see revenue growth in the long run.
