United Parcel Service plans to close at least 22 sorting facilities and truck terminals this year to cut costs as it intentionally shrinks its shipping business with online retailer Amazon.
The sites marked for closure are located in several large markets including Atlanta, Dallas, Los Angeles and Miami, as well as in smaller cities and rural communities. The list of locations was provided in court filings this month in response to a lawsuit filed by the International Brotherhood of Teamsters. The union argued that UPS is violating its collective bargaining agreement with a recently launched buyout program for truck and delivery van drivers.
Last year, UPS closed 93 locations nationwide as part of its cost-cutting program. The Atlanta-based shipping and logistics giant is reducing expenses as it pivots to delivering parcels and providing services that carry higher profit margins than routine package shipments for online retailers like Amazon.
UPS has not provided an estimate of the savings it expects from closing the 22 sites this year. The company also did not elaborate on which of the 22 properties it owns or leases and whether it plans to sell or find new tenants for those buildings.
"We're well into the largest U.S. network reconfiguration in UPS history, creating a nimbler, more efficient operation by modernizing our facilities and matching our size and resources to support growth initiatives," UPS spokesperson Karen Tomaszewski Hill said in an emailed statement.
The 22 sites marked for closure this year are "legacy conventional facilities [and there is] a lot of labor required to run those facilities," Nando Cesarone, president of U.S. operations and UPS Airlines, said during a Jan. 27 conference call to discuss earnings.
Operations now conducted at a property slated for closure will be transferred to "a much more nimble, quicker, automated, consolidated facility," Cesarone said during the call.
Workers at the Atlanta property set for closure, at 270 Marvin Miller Drive, are expected to be transferred to a newer facility at 1100 Fulton Industrial Blvd. NW in Atlanta or a recently modernized facility at 3930 Pleasantdale Drive in Doraville, Georgia.
Some of the 22 facilities are at least 40 years old, according to CoStar data. A 188,000-square-foot warehouse in Wilmington, Massachusetts, that UPS partially occupies, for example, opened in 1972. In Baltimore, a 41,000-square-foot distribution center opened in 1955.
During UPS' conference call last month, Cesarone said the company is analyzing the potential closure of an additional 60 or 70 sites in the United States this year. Cesarone did not identify the specific locations that may be closed.
Concurrent with its push toward more profitable services, UPS is also cutting jobs and either closing or selling its real estate holdings. In December, UPS sold a vacant Atlanta office building for $16.5 million to Kennedy Wilson. In August, it sold a portfolio of industrial and office properties for $368 million to Fortress Investment Group.