UPS announced Tuesday that it will cut 12,000 jobs as part of a bid to save $1 billion costs. Managers and contractor positions will make up most of the layoffs.

The job cuts come as UPS issued a disappointing sales outlook for this year, saying it expects global revenue of between $92 billion to $94.5 billion. That would be up from the $91 billion in revenue it reported for 2023, but analysts surveyed by Refinitiv had been expecting revenue of at least $95.6 billion.

UPS lost business last year as customers concerned about a possible strike by the Teamsters shifted shipments to rival carriers, such as FedEx. Although UPS said it expects to get most of that business back, it had won back only about 60% of that lost business.

UPS’ business surged to record levels in the first three years of the pandemic, as online shopping exploded. The company’s sales topped $100 billion for the first time in 2022. The fact that revenue in 2023 fell more than 9% and won’t top that benchmark again in the near future is “candidly difficult and disappointing,” said CEO Carol Tome on a conference call with investors Tuesday.

“Some of this performance was due to the macro environment and some due to disruptions associated with our labor contract negotiations as well as higher costs associated with the new contract,” she said.

UPS’ (UPS) stock sank 7% on Tuesday.

Employee headcount at UPS had grown with the surge in business to about 540,000. It trimmed that headcount back to about 495,000 by the end of last year through attrition and reduced flying hours, rather than layoffs.

But the company forecast that the overall US small package market, excluding Amazon, will grow by less than 1% in 2024. The company also is dealing with a 12.1% increase in union wage rates, driving its efforts to cut other costs. And trimming salaried staff is a major part of its cost-cutting effort.

UPS said it has about 85,000 managers as part of its global workforce of nearly 500,000 employees. It has more than 300,000 hourly US workers represented by the Teamsters union.

“It’s a change in the way we work,” said CFO Brian Newman. “So as volume returns to the system, we don’t expect these jobs to come back. It’s changing the effective way that we operate.”