This massive US company will now close 200 facilities, part of a plan to reduce its labor needs and save $3 billion by 2028.
UPS aims to close around 200 U.S. facilities as it shifts more volume into a growing number of automated package hubs, a top executive said during the logistics giant’s investor and analyst conference Tuesday.
The company is consolidating locations as part of its “Network of the Future” initiative, which aims to reduce UPS’ reliance on manual labor in its package sortation operations and save $3 billion by the end of 2028, said Nando Cesarone, EVP and President U.S.
Additionally, UPS is closing 40 sorts this year — up from 30 in 2023 — and seeks to automate other aspects of its operations, such as dispatching for package cars and feeder trucks moving volume in its network.
“Network of the Future is targeting all activities for automation within our four walls,” Cesarone said.
“These building consolidations and automations yield real savings.
For example, we’ll have fewer feeder runs.
We’ll be able to eliminate both a.m. and p.m. ground and air feeds in many, many locations.”
Examples of UPS’ cost-saving efforts, according to an investor presentation, include consolidating four facilities in Massachusetts, Connecticut and Rhode Island into nearby hubs.
The company also plans to shutter its Chalk Hill facility in Texas and its New York Capital Village Center hub while modernizing nearby facilities to help handle volume growth.
Facility consolidation will lower UPS’ cost to serve customers while improving its volume-per-resource ratio, Cesarone said.
That ratio is calculated as the average daily volume divided by U.S. employees.
The ratio was 51 in 2023, and UPS wants it to increase to about 59 in 2026.
At the same time, UPS will invest in 63 automation projects throughout the country to support projected volume growth in a less labor-intensive manner.
The logistics giant aims to more than triple the number of automated buildings in its network by the end of 2028, growing to 400 facilities, Cesarone said.
The large majority of automation projects will be completed in existing buildings, while 10 will come from newly built locations.
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Also Read: A Healthcare Service Company Now Announces Unexpected Layoffs
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Other Economy News Today
A famous game retailer now begins layoffs as sales fall and competition grows from streaming services, the company confirms.
GameStop said Tuesday in a regulatory filing that it recently eliminated an undisclosed number of jobs as a cost-saving measure.
The move comes as the video game retailer reported double-digit net sales declines in the fourth quarter and for the full year ending February 3.
Fourth-quarter net sales fell more than 19% year over year to $1.79 billion from $2.23 billion last year.
Net income for Q4 rose 31% to $63.1 million, up from $48.2 million, but gross profit fell 16% to $419.2 million, down from $499.8 million a year earlier, the company said.
The company reported net sales for the full year fell 11% to $5.27 billion from $5.93 billion the prior year.
It swung to a net income of $6.7 million from a net loss of $313 million in the year-ago period.
GameStop said this week it had about 8,000 full-time salaried and hourly employees and between 13,000 and 18,000 part-time, hourly workers globally, depending on the time of year, as a result of the seasonal nature of the business.
A mix shift in software sales, fewer large game console releases, declining hardware sales and the growth of subscription services contributed to GameStop’s Q4 and full-year sales declines despite an extra week on the calendar, Wedbush analysts led by Michael Pachter said in a Wednesday note.
“With its current cash balance, GameStop can weather $100 million of annual losses for a decade or more.
However, should its revenues decline by $150 – 200 million per year (which we think is highly likely given its lack of clear strategy to replace lost games sales), it may have trouble trimming costs fast enough to stem the growth of its losses.
If we’re right, GameStop has a likely runway of no more than five years,” Pachter said.
“We see nothing in their ‘strategy’ that will stop the revenue declines and nothing in their investment plans that will allow them to survive for more than a decade,” Pachter said.
“We expect them to keep losing more money each year and eventually shut down.”
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Also Read: A Massive Discount Retailer Is Now Closing 600 Stores
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