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Idrive hotels7/3/2023 "If you think about how we grew up as a company if we built up a facility, we spun off the building and then we would build up another facility and spin off a building," explained Tomé, who served on UPS's board for 17 years before taking the CEO role in 2020. Automation in larger buildings makes any extra drive time less of a concern since it's so much faster than sorting packages manually. The company will begin slowly selling facilities in the second quarter, Newman said, ramping up through 2025. Driving more consolidation on the ground could potentially allow us to reduce our overall building footprint in the US," Newman said Tuesday. "We are pulling more volume into our large regional hubs further leveraging the automation in those buildings and enabling us to eliminate sorts in smaller buildings. On Tuesday, executives gave a bit more detail into the mechanics of that plan. UPS has had a plan in place for roughly a year to slowly consolidate some package handling into larger automated facilities. Glenn Gooding, presdient of iDrive Logistics who spent more than 20 years at UPS, said this period of driver layoffs is normal in an economic downturn and the company will simply start hiring again when volume picks up (and once it knows how much labor will cost given a new agreement with the Teamsters Union is in the works).īut beyond initial cuts, UPS and FedEx are leaning into technology upgrades to shrink strategically and emerge from the doldrums more efficient. UPS is also starting with some air-side trims as customers shift from faster, more expensive air shipping to slower, thriftier services. It started with big layoffs and parking planes and is working toward a complete structural overhaul of the business that marks a turning point for the 50-year-old company. Its largest competitor, FedEx, is also on a cost-cutting crusade - though a longer and more dire one. UPS is still investing in some areas - like healthcare logistics - but it's looking to trim in others. And in terms of overhead, we see opportunities to further reduce costs by leveraging technology," CFO Brian Newman told investors on Tuesday. "Across our global business, we will continue to manage headcount with volume levels. With the average daily volume of packages down 5.4% year-over-year, the company is trimming where it can in order to hold onto its industry-leading profits. UPS's first-quarter revenue was down 6% compared to the same period last year, the company reported Tuesday, helping send shares down some 10% as investors digested the results. Though UPS CEO Carol Tomé has made onlookers and analysts question whether she could fend off gravity, the first quarter proved the logistics giant isn't immune to wider economic forces after all. Both UPS and FedEx are downshifting and planning futures with smaller, more efficient networks.Revenue in the first quarter was down 6% and package volume was down by 5.4%. UPS said Tuesday revenue for the year will come in at the lower end of projections.Account icon An icon in the shape of a person's head and shoulders.
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