The International Brotherhood of Teamsters, which represents around 330,000 UPS employees, including drivers and package handlers, is threatening to strike if a new labor agreement isn’t reached by the expiration of their current five-year contract on July 31. The negotiations are largely focused on economic terms, including wages and benefits, and progress depends on how willing both negotiators are to adjust their current proposals. If a strike does occur, U.S. supply chains will see significant disruptions. In this article, we will discuss the impact of the UPS strike on shippers, negotiations, and businesses.
The Impact on Shippers
Experts suggest that the most vulnerable UPS shippers are those without alternative carriers in place to handle diverted packages. Volume shifts will be easier for shippers that have existing business with UPS competitors. However, it gets harder if shippers don’t have enough volume and financial muscle to compel other carriers to make extra room in their networks at the last minute. That’s why they are highly recommended to diversify their carrier mix to mitigate exposure to single-carrier disruptions and capacity constraints.
The Impact on Negotiations
Timing matters in labor contract negotiations in which it’s in the Teamsters’ favor this bargaining round. The pandemic significantly benefited UPS’ bottom line due to a surge in demand and locked-in contract wages while competitors grappled with climbing labor costs. That said, the Teamsters demand large raises in the next contract and described a recent proposal from UPS as “unacceptable.” There’s no certainty of a strike, but its chances are increasing. If the standoff continues, a strike will occur, and negotiations will crumble.
The Impact on Business
A strike could significantly disrupt UPS’ business and affect the company’s bottom line. Rival FedEx hadn’t seen any material benefit from the talks in May when anxious UPS customers might’ve shifted packages to other carriers, despite having “great conversations with legacy UPS customers.” Carriers will limit how much diversion activity they’re willing to accept. The question is how much business will other carriers be able to take on. In this situation, shippers who have already diversified their carrier mix could have a slight advantage or even leverage over others.
All in one, UPS’s labor contract negotiations are crucial for both union and company parties, and its impact could be significant on shippers, negotiations, and businesses. Shippers are recommended to diversify their carrier mix, and negotiations are in favor of the Teamsters due to the pandemic. Even though there’s no certainty of a strike, the chances of one are increasing, and its impact will be felt by all parties involved.