Parcel delivery giant UPS announced late last week it plans to eliminate 1,800 management and administrative jobs. The job reduction represents nearly 3% of the 63,000 the company’s U.S. management employees.

About 1,100 employees will be offered a voluntary separation package as part of the reduction, which aims to streamline the company’s U.S. small package segment. That segment represents roughly 60% of UPS’ annual revenue. It handles shipments of up to 150 lbs. by ground and air.

Other cuts will come through attrition and layoffs. UPS employs 408,000 workers worldwide, with about 340,000 based in the U.S.

UPS will reduce its U.S. regions from five to three and its U.S. districts from 46 to 20 in April, according to a release. The company has no plans to close any operating facilities. UPS said the consolidation of offices will not affect the sales and operations team, including drivers.

Gerard Hempstead, president of Hempstead Consulting and a former vice president for DHL, says UPS management is making the right moves to adjust the headcount to the shipment count coming in the door.

“It appears that we might be seeing the end of the tremendous declines in shipment count year over year, and now management is going to adjust the team to correlate with its book of business,” Hempstead says.

UPS must continue to improve profits and increase productivity, Hempstead adds, because “there were too many managers for the number of packages being handled and they have to rationalize the management pyramid.” If business improves then headcount can be added over time, he adds.

There may be signs that the worst is over, “but there are not signs that the economy is improving if you look at shipments and top-line revenue,” Hempstead explains. It’s only through rationalization of the network and attrition of headcount that UPS has pre-announced improved earnings expectations for the fourth quarter, he notes. “It’s not because the economy is bouncing back.”