UPS explores outsourcing UK parcel delivery to third-party couriers

United Parcel Service plans to switch from employee delivery drivers in the United Kingdom to using independent contractors that have their own vehicle fleets to deliver parcels, according to Unite, the country’s largest trade union, and a source close to the situation.

The news comes as the powerful Teamsters union in the United States claims that UPS (NYSE: UPS) is violating a collective bargaining agreement by steering parcel delivery to a subsidiary that relies on gig workers. It raises questions about whether UPS will eventually try to replicate the nonunion UK model in the United States as a way to reduce costs.

UPS will stop using employees as frontline delivery workers in the UK by June 2027, resulting in the elimination of more than 3,000 jobs at 51 sites, Unite said in a June 12 news release. The UPS workforce would drop from 4,000 to 800 people, it added.

The union suggested the new UPS driver pool will come from self-employed individuals picking delivery assignments through an app and getting a piece of the delivery fee, similar to how an Uber driver functions.

UPS actually envisions a model more like that of Amazon, which contracts with outside service providers who are responsible for managing fleets and hiring in their local delivery area, an industry source familiar with UPS’s thinking said.

Some workers could be rehired by third-party contractors that UPS plans to partner with for last-mile deliveries, according to Unite. It’s also possible some third-party couriers could use independent gig workers to carry out deliveries.

The company is consulting with Unite and two smaller unions, the National Union of Rail, Maritime and Transport Workers a;nd the United Road Transport Union, about the proposed changes to UPS’s business in the UK and how they could be implemented.

“We constantly review how we can enhance customer experience and improve efficiency in response to changing market demand. As a consequence, we are evaluating options for our business in the UK as we remain committed to providing the highest standard of service and value our customers expect across the UK,” a UPS spokesperson said in an emailed statement.

Unite condemned UPS’s plan and said it is considering a strike to show its opposition. “The way UPS is treating its workers is disgusting.

Unite has made it crystal clear that UPS’ plans are completely unacceptable and if it doesn’t reverse them then all avenues including industrial action will be actively pursued,” said Unite General Secretary Sharon Graham.

“This is an incredibly wealthy company trying to cynically further boost its profits by casualising its delivery service in the hope that no one notices.” UPS had net income of $5. 57 billion in 2025, a 3. 6% decline from the prior year. U. S.

driver dispute The Teamsters made it official policy last week to challenge UPS for allegedly diverting parcel deliveries to UPS-owned Roadie, which uses independent drivers. Under the 2023 contract between the parties, all parcels moving through the UPS network must be handled by Teamster workers.

But Roadie and outside analysts say Roadie doesn’t touch traditional parcels that move through the traditional UPS sorting system. Instead, Roadie provides same-day grocery and parcel delivery from retail stores to shopper residences, and delivers bulky items that don’t fit in UPS’s automated parcel sorting system.

Parcel industry consultant Satish Jindel argued in a FreightWaves commentary last year that UPS needs to leverage Roadie’s less-expensive outside delivery agents for B2C deliveries, which are too costly to make with unionized drivers and large vans, if it wants to stem loss of market share to other couriers and boost profitability.

Employee drivers should be used for traditional B2B routes with multiple stops, he said. Incumbent parcel giants are under increasing pressure from shareholders to boost profitability, from retail customers that need low shipping costs to retain online customers and a swarm of low-cost startup couriers offering cheaper rates.

It is difficult for them to economically compete with e-commerce fulfillment providers that operate from regional and local fulfillment centers when they still operate massive hub-and-spoke networks that were built for international or cross-country B2B service, with aircraft and other expensive infrastructure.

That is why Jindel and other analysts have also urged FedEx to consider using gig workers for last-mile residential delivery. Click here for more FreightWaves/American Shipper stories by Eric Kulisch. Write to Eric Kulisch at ekulisch@freightwaves. com.

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