Article: Can Parcel Orchestration Shield Your Business from 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.