UPS will cut the day sort at its Louisville Centennial Hub (LCH) in its latest response to weaker package volumes.
The closure of the sort is expected to result in some job losses, although at this stage it is unclear how many positions will go.
“In our industry, packages equal jobs, and we need to match capacity and the number of jobs with current package volume,” a UPS spokesperson said.
Union Teamsters Local 89 said that it was not privy to the details of how UPS intends to end the sort.
“We are actively investigating the situation and have meetings scheduled with UPS Labor Management to discuss their plan at length,” the union said on December 29.
“As always, we intend to enforce our contract and ensure all our members’ contractual and legal rights are respected.”
Teamsters Local 89 described the day shift sort as a relatively small operation.
“Most, or all, its volume can likely be absorbed by the other, larger LCH sorts,” it said.
“With LCH’s natural turnover rate, as well as the likelihood of the work being moved to the larger sorts, Local 89 does not anticipate a massive impact on our membership beyond shift and schedule changes.”
While the move isn’t expect to have too much of an impact on job numbers, it is the latest signal of how the express market continues to come under pressure due to weaker volumes.
Last year, UPS offered severance packages to hundreds of pilots as a result of lower demand levels.
In October, UPS reported a 12.8% year-on-year dip in third-quarter revenues, which it said was due to a drop in demand as a result of “unfavorable macro-economic conditions”.
UPS isn’t the only express firm looking to respond to the weaker package volumes.
In November last year, FedEx launched an offer encouraging pilots to move to regional passenger carrier PSA Airlines as direct-entry captains.
Its flight operations were “significantly overstaffed” a spokesman said.
Meanwhile, Freighwaves reports that the express firm is also looking to cut its minimum flight hours guarantee and offer early retirement to pilots.
The company is also negotiating a new contract with pilots and in July, the pilots rejected the latest offer from the express firm.
Late last year, the company lowered its revenue forecast for fiscal year 2024 to a low single-digit decline after a below-expectation second quarter running to November 30.
Revenues for the second-quarter period dropped by 2.6% year on year to $22.2bn, while operating income for the period was up 9% to $1.28bn.
The decline in revenues was led by the express division which is struggling with sluggish demand and a shift to lower cost shipping options.
Its freight division also had a tough time due to the lower demand levels but the ground network did report a revenue increase.
It also announced a re-organisation of its air network as part of plans to reduce costs.
UPS attempts to offload more than 100 pilots due to weaker demand levels
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