Article: Can Parcel Orchestration Shield Your Business from UPS Strike Disruptions?

As UPS celebrates record-breaking profits of $11.5 billion and revenues of $100 billion in 2022, their employees — who move an astounding 24% of U.S. parcel volume and 6% of the U.S. GDP in their trucks daily — work hard and long hours to help achieve this success. But it seems UPS employees have had enough.

How Parcel Orchestration Could Help Mitigate UPS Strike Disruptions

UPS unionized workers, which are part of the International Brotherhood of Teamsters and represent over 340,000 UPS employees, have been locked in negotiations with the company since mid-April. The Teamsters’ primary concern is the stark contrast between UPS's thriving financials and the harsh reality faced by their workforce, where two-thirds of employees work part-time for wages as low as $15.50 an hour. With the July 31 contract deadline looming, the stakes of these negotiations couldn’t be higher, and the stage is clearly set for potential disaster both for UPS and U.S. commerce.

So what can UPS shippers do now to insulate themselves from unprecedented service disruptions to minimize financial and operational impacts on their businesses? This article takes a closer look at the potential UPS strike, what it would mean for parcel shippers, and how shippers can act now to mitigate risks ahead of a parcel crisis.

So What’s the Problem?: Understanding the UPS Strike

UPS Teamsters have threatened to strike on July 31, sending a strong message to the company. As Teamsters' leader Sean M. O'Brien stated at a rally in Orange, Calif., “This company has made record profits because of the hard work of Teamsters, and now it’s time for UPS to reward the people who make this company a success.” The powerful union seeks an agreement that not only shares the billions of dollars in UPS pandemic profit with workers but also exerts leverage over other negotiations and helps recruit new members.

At the core of the Teamsters' demands are better pay, more full-time work, improved job security, and the elimination of the controversial two-tier “22.4” job classification that allows lower-tiered workers to receive less compensation for the same work as senior employees. Workers are also calling for an end to excessive overtime, better protections against company harassment, the removal of driver-facing cameras, and safeguards from hot weather.

Generally, the Teamsters are pushing to expand the number of full-time positions and end subcontracting practices. Additionally, the union's agenda includes more manageable worker schedules following the COVID-era shipping spike that forced many employees to work a sixth day on the weekend – a practice the union has dubbed “the sixth-day punch.”

While UPS has publicly stated its intentions to reach a deal to keep operations running this summer, many union workers question how much the company will budge on current contracts. Should UPS fail to adequately address Teamsters’ concerns, the union is set to dip into its $300 million strike fund to support employees through the strike – putting further pressure on the company to take union demands seriously.

What a UPS Strike Means for Parcel Shippers

The potential UPS strike is a significant cause for concern for parcel shippers, as UPS is responsible for moving nearly a quarter of all parcel volumes in the U.S. Such a disruption would put enormous strain on other major parcel carriers like USPS, FedEx, and DHL. It would be nearly impossible for these carriers to cover the full volume from UPS customers. In fact, FedEx made it clear that they would not be able to take on last-minute customers in the event of a UPS strike, instead pushing for new contracts to be completed by late March. These public moves highlight the capacity crisis that could be unleashed if UPS negotiations do not go well.

Of course, the strike would have the most consequences for shippers that are accustomed to the simplicity of a single-carrier UPS contract. Despite higher costs, shippers have often remained loyal to the company due to ease of tendering, a wide range of service levels, and the ability to deliver anywhere at any time. While these shippers previously shied away from carrier diversification due to perceived parcel management complexity, they now find themselves most at risk during a potential strike.

Without UPS, these shippers will suddenly be forced to determine how, when, and where to use national, regional, and local carriers, with little to no experience in such a nuanced level of parcel management. A UPS-only strategy has never required much planning, leaving these shippers most vulnerable to significant impacts on their parcel shipments should Teamsters move forward with a labor strike. A UPS-only plan amounts to this: “I plan to give all my parcels to UPS to deliver.” Full stop. Not a recipe for success with a national strike looming.

How Parcel Shippers Can Get Ahead of the UPS Strike with Parcel Orchestration

In light of the potential UPS strike, parcel shippers must consider alternative strategies to ensure business continuity. Parcel Orchestration offers a solution to address the challenges posed by a single-carrier reliance on UPS. By diversifying their carrier network, shippers can minimize disruptions and maintain smooth operations during uncertain times.

Legacy multi-carrier shipping systems have not traditionally provided the level of planning required for managing a diverse range of carriers. These systems mainly focus on label printing and cannot optimize complex upstream processes for multi-carrier management and shipping execution. Whereas Parcel Orchestration platforms are next-generation parcel management technologies that provide a layer of intelligence to automate planning and more granular decision-making. These systems take into account various factors, including:

  • Delivery area: Unlike UPS, smaller carriers may not cover all locations. Parcel Orchestration systems consider these limitations in their planning, disqualifying those that either don’t deliver to certain areas or whose performance is sub-optimal in those areas
  • Location type: Certain carriers may apply surcharges for deliveries to specific locations, such as residential areas, tradeshows, schools, or government buildings. Parcel Orchestration platforms take these factors into account for cost-effective planning.
  • Shipment attributes: Not all carriers can handle all types of shipments. There may be limitations or unexpected surcharges based on size, weight, hazardous materials, or medical requirements. Parcel Orchestration systems are designed to work with these constraints.
  • Pickup limits: During a strike, pickup minimums and limits will likely be enforced. Parcel Orchestration platforms help monitor these restrictions to ensure smooth shipping processes.
  • Carrier incentive monitoring: As shippers begin to diversify their carrier networks, they need to monitor incentives and ensure they maintain the most cost-effective and efficient shipping strategies.
  • Performance: There is no doubt that customers have grown accustomed to a high level of performance from major players like UPS and FedEx. Not all carriers can meet this standard under all circumstances. Factoring in performance as a selection criterion is critical to helping shippers keep delivery promises.

By utilizing a Parcel Orchestration platform, shippers can seamlessly transition from a UPS-centric strategy to a more diversified carrier network, ensuring their parcel shipments continue flowing smoothly despite potential disruptions.

Navigate Uncertainty with Sendflex Parcel Orchestration

Sendflex Parcel Orchestration technology has emerged as an essential solution for shippers looking to diversify their carrier networks and navigate potential disruptions like the UPS strike. Sendflex provides an intelligent, no-code, and data-driven approach to parcel optimization that enables shippers to optimize shipment planning and execution across multiple carriers, ensuring efficient and cost-effective operations.

With Sendflex, shippers can take advantage of essential parcel management features:

  • Super fast routing and rating engine – 20k routes, including time-in-transit and rate calculations, per second
  • Real-time carrier performance monitoring
  • Simulations and “what-if” analysis
  • Support for national, regional, and local carriers
  • Streamlined onboarding and integration with existing systems

Don't let the potential UPS strike impact your business. Safeguard your parcel shipping operations by exploring the benefits of the Sendflex Parcel Orchestration platform. Request a consultation with our Sendflex experts today and discover how our platform can help you stay ahead in the volatile and uncertain parcel environment.


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