Tuesday, July 23, 2024

What a potential UPS strike could mean for your packages

New York

25 years ago came the UPS strike of 185,000 workers Operations of logistics companies came to a standstill. The 15-day strike slowed package deliveries, overwhelmed the US Postal Service and FedEx. hurt Businesses across the United States.

Now, there are more than 340,000 UPS workers represented by the Teamsters Union Threat of strike Over wages, working hours and working conditions if there is no agreement in contract negotiations between the company and the union. If a strike were to occur, it would be the largest single employer strike in US history.

The strike will also begin As shopkeepers Head into the back-to-school season and retailers are gearing up for the peak holiday stretch later in the year.

Jeff Haynes/AFP/Getty Images/File

A strike by UPS workers in Chicago in 1997 was the last major UPS strike.

How bad can it get? Logistics experts predict that a short UPS strike won’t be as catastrophic as it was in 1997 because things have changed in the intervening quarter century: for example, there are more shipping alternatives. However, if the strike lasts for more than a week, they say, there will be some empty shelves, higher prices and slower delivery of packages to customers.

In a worst-case scenario, a prolonged UPS strike could cause major disruptions to the US supply chain network.

Shippers have more options than they did in 1997: FedEx and regional carriers have grown since then, and Amazon’s logistics operation didn’t exist then.

Walmart, Target and other retailers have also developed their own last-mile delivery operations and offer customers the option to buy online and pick up their orders in stores. Gig companies like Uber entered the delivery market.

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“The big lesson learned from that strike was diversification,” said Cathy Roberson, president of supply chain research firm Logistics Trends & Insights.

Richard Drew/AP

The contract between UPS and the Teamsters Union expires on August 1.

The economy has slowed and many consumers have pulled back on favorite items like electronics and clothing. That means demand isn’t as high as it was before the pandemic, and retailers don’t need to carry as much inventory for back-to-school shopping and the holidays. In fact, many companies are now stuck with excess inventory.

UPS’s revenue fell 6% in the first quarter from a year earlier and it expects “volume to remain under pressure” in April.

“If you look at the market as a whole, nobody’s looking at the pickup anymore,” Roberson said. “From an economic perspective, we’re going to have a very muted peak season.”

Businesses also have time to prepare for the possibility of a strike.

FedEx and other carriers are available It encouraged shippers for several months to switch from UPS To avoid delays caused by strike.

According to global shipping and logistics company Pitney Bowes, UPS delivers a quarter of all US packages to their final destination, and there isn’t enough capacity in the market to replace UPS. Because many packages delivered by the U.S. Postal Service are moved by UPS, its share of shipments exceeds that number.

Overall, UPS handled an average of 18.7 million domestic packages per day in the first three months of this year.

Logistics experts say small and medium-sized businesses along the pecking order will see more delays from the long strike than big-box chains.

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“Major retailers have contingency plans,” said John Haber, chief strategy officer of third-party logistics provider Transportation Insight Holdings, who spent more than a decade working in UPS’s corporate finance office.

Businesses and customers in rural areas will also be hit harder by the prolonged strike.

“If you come out for three days, you start going into the danger zone in remote areas,” he said. “That’s when things really start to get stuck. And then you back off.”

Logistics experts generally believe that a long strike would avoid damaging impacts on businesses and the economy. Both sides have a lot to lose in a long dispute.

UPS CEO Carol Dohm predicted a deal would be reached without a strike.

“We are aligned on many key issues,” he said in April. “While we expect to hear a lot of noise during negotiations, I am confident that a win-win-win agreement is very much within reach and that UPS and the Teamsters will reach an agreement by the end of July.”

Teamsters General President Sean O’Brien, while acknowledging progress has been made, refuses to say whether or not he thinks a strike is possible.

“When you get the meat and potatoes of wages and benefits, things are very dicey, very controversial,” O’Brien told CNN last week. “Our goal is to get the best possible deal to avoid a strike.”

A promising indicator of a deal came this week when negotiators for UPS and Teamsters reached a tentative agreement on a key issue in contract talks: Air conditioning installation – gradually – across its entire fleet of 95,000 delivery vans.

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“The odds of a strike are about as high as they’ve been since 1997, but they’re still less than 50%,” said Alan Amling, a fellow at the University of Tennessee’s Supply Chain Institute and a former UPS executive.

“Both UPS and the Teamsters know that the noise that comes out of a strike will go down well because there are alternatives. If that happens, it’s mutually destructive,” he said.

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