UPS Lays Off 404 in Denver Warehouse Amid Automation Push

Glenn Taylor

Tue, Nov 19, 2024, 11:45 AM 4 min read

East and Gulf Coast port dockworkers that have long railed against automation may have been fed more ammo for their ongoing labor battle with their maritime employers.

UPS is laying off 404 workers at a package processing facility near Denver as the logistics provider further turns to automation to power its warehousing operation.

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According to a Worker Adjustment and Retraining Notification Act (WARN) notice filed by the company on Thursday, half of the Commerce City, Colo. warehouse will temporarily close on Jan. 15, 2025 as part of the facility’s modernization. UPS expects the enhanced facility to fully reopen in 2026.

The temporary closure won’t impact customer service, a UPS spokesperson said.

In the WARN notice, the Atlanta-based company said the layoffs were “due to changing business realities in our network.” This refers to UPS’ “Network of the Future” plan, a network consolidation designed to flow more volume into automated warehouses and save $3 billion in costs by 2028.

As part of that plan, UPS closed 45 sortation centers in 2024, as well as nine full warehouses, CEO Carol Tomé said in a recent earnings call. The closures are just a portion of the roughly 200 total facilities expected to be shuttered over a three-year span.

“We now process 63 percent of the volume in our hubs in some sort of an automated way,” Tomé said. “That’s up five percentage points from a year ago.”

During the company’s investor day in March, UPS’ U.S. president Nando Cesarone foreshadowed the job cuts, saying that the Network of the Future initiative would “significantly reduce our dependency on labor.”

By the end of 2028, UPS wants to implement major automation projects at 63 sites, which would cost the company $9 billion. But the company already claims it is seeing savings on the back end, seeing cost per piece (CPP) decline 4.1 percent in the third quarter from the year prior.

“These building consolidations and automations yield real savings,” Cesarone said in the March investor day call. “For example, we’ll have fewer feeder (tractor trailer) runs. We’ll be able to eliminate both a.m. and p.m. ground and air feeds in many, many locations.”

Chief financial officer Brian Dykes said during the October earnings call that the network modernization has resulted in a more efficient operation in the third quarter, with the consolidation contributing to an 8 percent improvement in the number of packages sorted in a single hour of work.

The production improvements even helped UPS offset 50 percent of the 5.2 percent union wage increase that went into effect last July for 340,000 employees after the Teamsters agreed on a new five-year contract.

UPS is leveraging pick-and-place robotics technologies to help sort small packages, as well as robotics technologies to make unloading trailers less demanding for workers. Additionally, the firm uses autonomous guided vehicles to help workers more safely move shipments and packages through their facilities.

Of the 404 workers let go from the job, 401 are on the package processing side and three are revenue recovery employees, the WARN notice said.

This closure will affect both union and non-union employees. The Teamsters-represented workers have bumping rights, which means they have the first right to apply for other available positions within the company.

The company gave a 60-day notice to the impacted workers, or their union representatives at the Teamsters, on Friday.

UPS already axed 12,000 jobs to kick off the year, many of whom worked in management positions. Those layoffs saved the logistics firm an estimated $1 billion.

In August, UPS temporary closed a Baltimore customer center, resulting in the termination of as many as 540 employees. The parcel delivery company laid off 118 more months earlier upon cutting a package sorting shift.

Aside from UPS, other logistics players have reduced headcount in recent months.

Chief competitor FedEx laid off what the company said was a “small number” of employees as it attempts to streamline and realign functions within its wider business. The delivery firm is in the thick of a companywide reorganization, and like UPS, is cutting costs to facilitate the overhaul.

Contract logistics provider GXO, which itself laid off more than 500 employees this year, is cutting another 384 by January. The cuts come as the company is closing two warehouses, one in New York and one in California.

Pitney Bowes has dealt out the largest recent number of job cuts by a wide margin, axing 2,300 employees in the third quarter. That doesn’t account for the additional 1,200 employees who were laid off from Pitney Bowes’ former e-commerce segment after it was sold off into liquidation.

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