Tuesday, July 25th UPDATE:

"UPS, Teamsters reach agreement in labor negotiations" - from ups.com

PREVIOUS UPDATE:

From: Sean Kim, Vice President of e-Commerce Experience & Global Parcel Strategy

With all the recent media coverage, I’m sure you’re aware of the potential impending UPS strike affecting their entire delivery network. I wanted to take a moment to let you know we are staying abreast of the situation. While we aren’t directly involved in the negotiations, we want to share some relevant information so you can prepare for a potentially substantial impact.

BACKGROUND:

Historically, UPS and the International Brotherhood of Teamsters negotiate a new agreement every five years. Most of the time, these negotiations are completed amicably with minimal media coverage. The last time a strike occurred was in 1997, which lasted 15 days, crippled UPS’s network, and cost UPS an estimated $600 million. Since then, negotiations for contract years 2002, 2008, 2013, and 2018 were completed with no strikes.

UPS and the Teamsters are actively negotiating a new agreement ahead of the expiration of their current 2018 agreement on August 1, 2023. There are an estimated 340,000 union members employed by UPS delivering the domestic portion of an estimated 24 million packages per day. If the two organizations are not able to come to terms on the new agreement ahead of the August 1, 2023 deadline, the Teamsters have already approved to organize a strike until an amical agreement is established. The status of the negotiations can be followed on the UPS website at https://about.ups.com/us/en/newsroom/negotiations.html. We recommend shippers check back regularly on the status.

IMPACT:

If a strike takes place, the UPS network and all deliveries will come to an immediate halt on August 1, 2023. Any packages shipped via UPS will not get delivered until an agreement is signed.   

CONTINGENCY PLANNING:

Like everything in business, shippers should start forming their contingency plans in case of the worst-case scenario. Unfortunately, the seemingly obvious option of switching to FedEx won’t be an option for most shippers. To protect the integrity of their network, FedEx has proactively announced they will not take on new volume resulting from a UPS strike. Similarly, USPS may struggle with network capacity as shippers panic-switch their carrier usage. Shippers should consider diversifying their carrier usage now to lessen the blow of a perceived panic-shift at the last minute. In addition, shippers should start preparing messaging to their clients in case a strike does occur. Note: customers shipping with Ryder E-commerce parcel solutions may have alternate solutions for their direct-to-consumer business. Please contact your CSM or support@whiplash.com for assistance in implementing your continency plans.

EXPERT OPINION:

There has been and will continue to be a lot of media buzz around an imminent strike. My recommendation is to take this buzz with a grain of salt. UPS and the Teamsters are committed and motivated to find common ground on a new agreement. While there are no guarantees, I believe the chances of an actual strike occurring are very low. A strike would have a devastating economic impact, with UPS potentially recognizing greater than $600 million in losses and the Teamsters having 340,000 union members unemployed. And as of this week, negotiations on 55 issues have already seen significant progress. That being said, shippers should, of course, protect themselves and start preparing now for a possible worst-case scenario.