Why a UPS Strike – and Its Business Impact – is Possible and What You Can Do Now
June 22 Update: Teamsters and UPS have reached a handshake deal that appears to avoid a possible strike, pending final ratification by members.
The negotiated terms include pay raises for 250,000 workers — including a $4.15 minimum lift in wages by 2022 — and agree to continuing Saturday delivery and the addition of Sunday service — something the carrier has been pushing for.
As you probably know by now, UPS workers represented by the International Brotherhood of Teamsters voted on June 5 to authorize a strike if consensus isn’t reached between the union and UPS before the July 31 expiration of their five-year labor contract.
On the table: healthcare premiums, working conditions, and wages for part-time employees as UPS could likely beginning offering seven-day-a-week shipping.
“Most people understand in the world of Amazon and e-commerce, UPS isn’t going to be Monday to Friday or even Monday to Saturday any more, it’s going to be a seven-day operation,” David Levin, spokesperson for UPS Teamsters United, told CNN Money. “But they made record profits. They don’t need concessions to do that.”
It’s been more than 20 years since the last UPS strike. That 15-day strike in 1997 is reported to have stopped delivery on 80% of UPS’ package volume and cost the carrier $780 million.
Given the current state of commerce in an online world, a strike in 2018 would be at least as catastrophic for UPS and its customers while disrupting the economy as a whole. The goods UPS transports domestically is equivalent to about 6% of United States GDP, according to CNN Money.
And it gives even more power to FedEx – which has closed the revenue gap with UPS in the intervening two decades – as a strike highlights one of its favorite differentiators because every so often there’s a threat of collective action from UPS workers while FedEx remains non-unionized.
That fear is commonly cited as the reason shippers like to split their volume between the two, just in case – a lesson from 1997 when FedEx wouldn’t open new accounts until the strike was resolved. Don’t be surprised if FedEx chooses a similar strategy should a strike occur again.
Fortunately, we have a few more weeks of negotiations ahead and a strike is certainly no done deal.
But as things remain uncertain, here’s what you can do in the meantime:
If you don’t currently have a FedEx account, or contact with your local FedEx rep, now’s the time to start the conversation. Keeping your options open and ensuring healthy competition will help build the relationship with your reps and ensure you always are covered.
We all know that change can be disruptive, and new accounts and pricing agreements can take a little time to get set up. However, this will be time well spent to ensure your company’s business interests are protected regardless the outcome of UPS labor negotiations.
Comparing UPS and FedEx rates and services is less like comparing apples to apples, and more like comparing apples to saxophones. At VeriShip, we specialize in helping UPS and FedEx customers protect against the unexpected.
With unmatched visibility into your shipping data we can guide you through the process of setting up new shipping accounts optimized to your shipping profile. Mitigate the stress and limit the time involved so you can focus on what you need to keep your business running on all cylinders.
Andrew Brueckner is VeriShip’s Chief Customer Officer. Backed by a team of data scientists and 10+ years of benchmarking data, Andy and his team work with shippers to understand and optimize their carrier contracts.