UPS offers buyout to more than 100K drivers as it unwinds Amazon business

In the largest buyout offer in UPS history, the shipping provider last week sent more than 100,000 van drivers a letter offering voluntary severance packages worth $150,000. The letters came after a federal judge dismissed a request by the Teamsters to prohibit the buyout, which the union argued was in violation of its labor contract with UPS.

Now that the judge has cleared the way for the offering—which the Teamsters said 10,000 drivers would likely accept—the company can move forward with the final phase of a restructuring plan designed to right-size its business and wean it off an increasingly independent Amazon, which for the moment remains its biggest partner.

“Amazon is doing a lot of its own trucking these days, a lot of its own delivery,” Zachary S. Rogers, associate professor of supply chain management at Colorado State University, told Retail Brew. “And I think it’s clear to UPS that they need to get a little bit leaner, and this buyout seems to be the way they’re going about that.”

Planned decoupling: UPS announced plans last year to shrink Amazon package volume by 50% over an 18-month period, and it has since cut approximately 1 million pieces per day with plans to cut another 1 million pieces per day in 2026. The business impact of the decoupling is already significant: In Q4, US average daily volume fell 2.4 million pieces, or 10.8%, with half of the decline stemming from the Amazon “glide-down” and from “deliberate actions to remove lower-yielding e-commerce volume from our network,” CFO Brian Dykes told shareholders last month.

The upside is lower labor costs, which Dykes said the company plans to achieve through “attrition” in the form of voluntary separation programs like the buyout offering.

As CEO Carol Tomé said around the time the decoupling was announced, “Amazon is our largest customer, but it’s not our most profitable customer. Its margin is very dilutive to the US domestic business.”

Looking at it from Amazon’s perspective, Rogers said the benefit of moving more logistics in-house is greater control over what has become one of the company’s main selling points: next-day and same-day delivery.

“Not that UPS isn’t a good partner,” he said, “but when they’re relying on somebody else, they don’t have control of that interface between themselves and the consumer.”

Embracing automation: Rogers said this explains why UPS took the buyout route, “because the Teamsters union is pretty good at protecting their employees and collective bargaining,” and as a result, “it’s tough to just get rid of a bunch of union folks.”

In addition, Amazon has pushed back against unionization in its logistics workforce whereas 70% of US UPS employees are represented by a union. So when it comes to cost-cutting, “Amazon can do that a lot cheaper than a union-based company like UPS,” Mike Hosted, VP of sales and marketing at ATBS, a business services firm serving trucking companies, told Retail Brew.

Yet both Amazon and UPS are embracing automation in their logistics network, laying the groundwork for an even more consequential shift in the industry’s labor force. UPS, for example, increased the percentage of US package volume in 2025 from 66.5% to 68% in 2025, and this year plans to “further automate our network,” per Tomé.

These kinds of investments in a smarter, more flexible network could be crucial to a successful post-Amazon future for UPS, according to Rogers. “Just because they lose Amazon doesn’t mean there’s nobody else out there,” he said. “There’s stuff to move, and there’s warehouses that need to be filled.”