United Parcel Service (UPS) announced Thursday that it will offer voluntary buyout packages to full-time U.S. drivers for the first time in its 117-year history, marking a significant shift in the company’s workforce strategy amid what it calls “an unprecedented business landscape.”
The announcement comes as UPS executes “the largest network reconfiguration in its history” — a sweeping overhaul that includes cutting 20,000 jobs and closing 73 facilities. The Atlanta-based shipping giant has been restructuring its operations following a reduction in deliveries for its key customer, Amazon, and adapting to new tariff policies.
Details of the Buyout Program
While specific financial details of the buyout packages have not been disclosed, UPS stated that drivers would “receive a generous financial package if they choose to leave UPS” in addition to any earned retirement benefits, including pension and healthcare.
The voluntary severance program, known as the Driver Voluntary Severance Plan (DVSP), would be available to all full-time U.S. drivers. Each driver would have the ability to decide if this voluntary program is beneficial to their family and the plans they have for their future.
This marks a historic moment for the company, as UPS has never before offered buyouts to its unionized delivery drivers, though it did offer similar packages to corporate employees in 2020.
Teamsters Union Strongly Opposes Plan
The International Brotherhood of Teamsters, which represents approximately 330,000 UPS workers, has vehemently opposed the buyout plan, calling it an “illegal violation” of the national contract, under which UPS had committed to create 22,500 more jobs.
Teamsters General President Sean O’Brien issued a strongly worded statement: “Our members cannot be bought off and we will not allow them to be sold out”. He accused UPS of trying to “weasel its way out of creating good union jobs here in America by dangling insulting buyouts in front of Teamsters drivers.”
The union emphasized that Teamster contracts enable UPS drivers employed 30 years or more to receive employer-paid health care throughout retirement, a benefit that would not be guaranteed to all workers under UPS’s severance plan.
Part of Broader Cost-Cutting Strategy
The buyout offer is part of UPS’s comprehensive restructuring plan called “Network of the Future,” which aims to optimize operations and improve profitability. UPS executives said during April’s earnings presentation that the company expects to save more than $1.2 billion this year by eliminating 25 million operating hours across the workforce.
The restructuring comes amid several challenges for UPS:
- Amazon, once UPS’s largest customer, has reduced its shipping volume by more than 50%
- The company is adapting to new trade policies and tariffs
- Increased competition in the parcel delivery market
- Need for greater operational efficiency
In April 2025, UPS announced plans to cut 20,000 jobs from its workforce of approximately 490,000 employees and close dozens of facilities as part of this network reconfiguration.
Contract Dispute and Legal Implications
The tension between UPS and the Teamsters centers on their five-year contract ratified in August 2023, which averted a nationwide strike. Under this agreement, UPS committed to creating 7,500 new full-time Teamster jobs and filling 22,500 open positions to provide more opportunities for part-time workers to advance to full-time roles.
The union also claims that UPS is failing to meet other contractual obligations, including providing at least 28,000 air-conditioned vehicles to drivers by 2028. The union gave the company until July 1 to respond to the information request, but UPS has not provided any data and instead requested additional time to respond.
O’Brien warned that “The Teamsters are prepared to fight UPS on every front with every available resource to shut down this illegal buyout program”.
Company Response and Market Context
UPS maintains that it is adhering to the terms of its contract with the union. The company stated it had approached the Teamsters regarding the buyouts and remains “committed to the agreements we reached in 2023, as part of our contract negotiations.”
CEO Carol Tomé has emphasized the unprecedented nature of current business conditions. In April, she told investors: “The world hasn’t been faced with such enormous potential impacts to trade in more than 100 years, so the only thing we’re certain of, is we don’t know which, if any, of our scenarios will play out”.
Impact on Workers and Service
UPS drivers are among the highest-paid delivery drivers in the country, with strong benefits negotiated through their union contracts. The buyout offer presents a difficult decision for many drivers who must weigh immediate financial incentives against long-term job security and retirement benefits.
Teamsters General Secretary-Treasurer Fred Zuckerman urged members to reject the buyout: “All drivers should reject this illegal and insulting buyout when UPS makes it public. UPS has forced buyouts on its own management in the past. They can’t force anything on us”.
Looking Ahead
As UPS moves forward with its historic restructuring plan, the conflict with the Teamsters union appears set to intensify. The outcome of this dispute could have significant implications for:
- Labor relations in the logistics industry
- UPS’s ability to compete with rivals like FedEx and Amazon
- Service levels for millions of customers who rely on UPS deliveries
- The future of unionized jobs in America’s shipping sector
The voluntary buyout program represents a pivotal moment for UPS as it attempts to balance cost-cutting measures with its contractual obligations to workers. How this situation unfolds will likely shape the company’s trajectory and labor relations for years to come.
With both sides digging in for what could be a protracted battle, the shipping industry and labor advocates will be watching closely to see whether UPS can successfully implement its buyout program or if the Teamsters’ opposition will force the company to reconsider its approach to workforce reduction.
