UPS Tries to Retire Its Way Out Of The Gutter with “Buyout for Driver Plan” (First Time In 117 Years

It only took 117 years, a dead-parcel market, and a stock chart that looks like a ski jump for UPS (down - 23.63% over the last 12 months) to reach for the big red button labeled “BUYOUTS FOR DRIVERS.” Not managers, or redundant inventory bean counters, but the actual drivers. The ones America has spent the last decade mythologizing like they’re Santa Claus with a better union plan.

(Source: Giphy) 

For more context, this is nothing short of pure panic. UPS has 330,000 unionized drivers, handlers, and clerks, and for the first time, they’re telling full-time drivers: “You want out? Here’s a check.” Never mind that every Teamster in the country is posting GroupMe screenshots of what these “generous packages” actually mean: less than sticking around for the full contract and milking that $170k comp package for all it’s worth. (If you’ve spent the last year making TikToks about “six-figure driver” life, sorry, your golden era is officially over.)

(Source: The Wall Street Journal) 

And yet, the context is even more brutal: UPS caved to the Teamsters last summer, signed a record deal (Wall Street cried, memes rejoiced), and almost immediately discovered that parcel volumes are as flat as my Diet Coke I left on the grill last night. Q1 daily US package volume down 3.5%... with Amazon now dropping off fewer packages because they don’t want to be the ones funding $10k-a-month benefit plans. Which is why management, realizing they’ve locked themselves into lifetime achievement wages for a shrinking business, is doing the one thing left: firing the starting lineup by “inviting” them to leave. 

For UPS, they think this gambit could actually accomplish something other than pissing off everyone in brown polyester. Especially considering when you look at the cold math. Lopping off expensive, senior Teamsters could finally stem the bleeding in those quarterly reports. $170,000 per driver (salary plus perks that make Goldman Sachs analysts weep) was never going to fly in a world where parcel volume is dropping and Amazon would rather build its own driver army. So UPS, swapping expensive legacy drivers for a leaner, cheaper workforce might… and that’s a hard might, give them a fighting chance to compete on cost with the Amazon death star and whatever FedEx is morphing into this quarter.

(Source: Giphy) 

Meanwhile, Teamsters President Sean O’Brien is getting his Jimmy Hoffa on, accusing UPS of “weaseling out of good union jobs by dangling insulting buyouts.” Translation: don’t expect any viral TikTok of a smiling driver cashing a fat check, but instead, expect a thousand grumpy guys in brown shorts telling reporters “it’s not worth it.” And it’s rich watching UPS roll out the “largest network reconfiguration ever.” Every time you hear “reconfiguration,” just picture a consultant with an Excel addiction telling 50-year-old drivers they should “pivot to adjacent verticals.” In April, UPS announced 20,000 job cuts. Now it’s “voluntary departures.”

Moral of the story here? This is what happens when you run out of growth stories and the only thing left to juice the numbers is to pay people to disappear. Buybacks didn’t save the stock. The pilot buyout last year was just the trailer. Now they’re coming for the guys who literally keep the wheels turning. Meaning, if you’re still overly bullish on UPS after this, you might want to punch yourself in the face and check if you’re concussed. Because when the company’s core business is shrinking, your best customer is ghosting you, and your only plan is “remove the expensive humans,” you’re not in a turnaround… you’re just circling the drain, but with fewer packages to deliver on the way down.

(Source: Giphy) 

And that’s exactly what appears to be happening to UPS at the moment. Of course, only time will tell how this impacts the core business… but for now, keep your eyes on this story, especially as management comes out with more “strategic plans” for this move and place your bets accordingly. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in Amazon as mentioned in the article.