A strike by 185,000 UPS workers 25 years ago paralyzed the logistics giant’s operations. The 15-day strike slashed package deliveries, overwhelmed the US Postal Service and FedEx, and affected businesses across the United States. Now, more than 340,000 UPS workers represented by the Teamsters union are threatening to strike over wages, hours and working conditions if there is no agreement in contract negotiations between the company and the union. If a strike goes ahead, it would be the largest single employer strike in US history. The work stoppage would also begin as shoppers head into the back-to-school season and retailers prepare for the holiday peak later in the year. How bad could it get? Logistics experts predict that a brief UPS strike would not be as devastating as it was in 1997 because things have changed in the intervening quarter century: There are more shipping alternatives, for example. However, if the strike lasts longer than a week, there will be some empty shelves, higher prices and slower package deliveries for customers, they say. In the worst case, a long-term UPS strike could cause major disruptions to the US supply chain network. More Choice Now Shippers have more choice than in 1997: FedEx and regional carriers have grown since then, and Amazon’s fulfillment operation didn’t even exist then. Walmart, Target and other retailers have also created their own last-mile delivery operations, offering customers the option to shop online and pick up their orders in stores. Since then, gig companies like Uber have also entered the market to deliver. “The big lesson learned from that strike was to diversify,” said Cathy Roberson, director of Logistics Trends and Insights, a supply chain research firm. The economy has slowed and many consumers have withdrawn from discretionary goods like electronics and clothing. That means demand isn’t as high as it was in the pandemic, and retailers don’t need to bring as much inventory for back-to-school and holiday shopping. In fact, many companies are stuck with too much merchandise right now. UPS revenue fell 6% in the first quarter compared with a year earlier and it said in April that it expects “volume to remain under pressure.” “In the market as a whole, nobody sees a truck anymore,” Roberson said. “From an economic perspective, we’re going to have a very quiet peak season.” Companies have also had time to prepare for the possibility of a strike. FedEx and other carriers have encouraged shippers for months to stay away from UPS to avoid strike delays.Strike ChancesUPS delivers about a quarter of all U.S. packages to their final destination, according to Pitney Bowes, a global company of shipping and logistics, and there’s not enough capacity in the market to replace UPS.And its share of shipments is even larger than that number indicates, since many of the packages delivered by the US Postal Service. are transported by UPS Overall, UPS handled an average of 18.7 million domestic packages per day in the first three months of this year Small and medium-sized businesses that are further down the pecking order than large chains would see the most of the delays due to a prolonged strike, logistics experts say. “Large retailers have contingency plans,” said John Haber, director of strategy at third-party logistics provider Transportation Insight Holding Company, who worked for more than a decade in UPS’s office of corporate finance. they will also be more affected by a longer strike. “If you stay out of the three days, then you start to get into the danger zone” in remote areas, he said. “That’s when things really start to get stuck. And then you fall behind.” Deal may be likely Logistics experts generally believe a protracted strike with damaging implications for business and the economy will be avoided. Both sides have a lot to lose in a protracted dispute. UPS CEO Carol Tome has been predicting that a deal will be reached without a strike. “We are aligned on several key issues,” she said in April. “While we expect to hear a lot of noise during the negotiation, I remain confident that a win-win contract is very feasible and that UPS and the Teamsters will reach an agreement by the end of July.” Teamsters General Chairman Sean O’Brien, while acknowledging the progress that has been made, declines to say whether or not he believes a strike is likely. O’Brien told CNN last week. “Our goal is to get the best deal to avoid a strike.” A promising sign of a deal came this week when UPS negotiators and the Teamsters reached a tentative agreement on a crucial issue in the contract talks: gradually installing air conditioning across their fleet of 95,000 delivery vans. strike are the highest since 1997, but still less than 50%,” said Alan Amling, a fellow at the University of Tennessee Supply Chain Institute and a former UPS executive. “Both UPS and the Teamsters know that the volume that they have left during a strike would be lost forever because there are alternatives. If that happens, it’s mutual destruction,” he said.
A UPS strike by 185,000 workers 25 years ago brought the The logistics giant’s operations came to a standstill. The 15-day strike slashed package deliveries, overwhelmed the US Postal Service and FedEx, and hurt business in the United States.
Now, more than 340,000 UPS workers represented by the Teamsters union are threatening to strike over wages, hours and working conditions if there is no agreement in contract talks between the company and the union. If a strike goes ahead, it would be the largest single employer strike in US history.
The strike would also kick off as buyers Head into the back-to-school season and retailers gear up for the peak holiday period later in the year.
How bad could it get? Logistics experts predict that a brief UPS strike would not be as devastating as it was in 1997 because things have changed in the intervening quarter century: There are more shipping alternatives, for example. However, if the strike lasts longer than a week, there will be some empty shelves, higher prices and slower package deliveries for customers, they say.
In the worst case, a longer-term UPS strike could cause major network disruptions to the US supply chain.
more options now
Shippers have more options than they did in 1997: FedEx and regional carriers have grown since then, and Amazon’s fulfillment operation didn’t even exist then.
Walmart, Target and other retailers have also created their own last-mile delivery operations, offering customers the option to shop online and pick up their orders in stores. Since then, gig companies like Uber have also entered the market to deliver.
“The big lesson learned from that strike was diversification,” said Cathy Roberson, director of Logistics Trends & Insights, a supply chain research firm.
The economy has slowed and many consumers have withdrawn from discretionary goods like electronics and clothing. That means demand isn’t as high as it was in the pandemic, and retailers don’t need to bring as much inventory for back-to-school and holiday shopping. In fact, many companies have way too much merchandise right now.
UPS revenue fell 6% in the first quarter compared with a year earlier and it said in April that it expects “volume to remain under pressure.”
“If you look at the market in general, nobody sees a truck anymore,” Roberson said. “From an economic perspective, we are going to have a very quiet peak season.”
Companies have also had time to prepare for the possibility of a strike.
FedEx and other carriers have encouraged shippers for months to stop using UPS to avoid the delays of a strike.
Odds of a strike
UPS delivers about a quarter of all US packages to their final destination, according to Pitney Bowes, a global shipping and logistics company, and there isn’t enough capacity in the market to replace UPS. And their share of shipments is even larger than that number indicates, since many of the packages delivered by the US Postal Service are transported by UPS.
Overall, UPS handled an average of 18.7 million domestic packages per day in the first three months of this year.
Small and medium-sized businesses that are lower in the pecking order than big chains would see the most delays due to a prolonged strike, logistics experts say.
“Large retailers have contingency plans,” said John Haber, director of strategy at third-party logistics provider Transportation Insight Holding Company, who worked for more than a decade in UPS’s corporate finance office.
Businesses and customers in rural areas would also bear the brunt of a longer strike.
“If you go outside the three days, then you start to get into the danger zone” in remote areas, he said. “That’s when things really start to get stuck. And then you fall behind.”
The deal may be likely
Logistics experts generally believe that a prolonged strike with damaging implications for business and the economy will be avoided. Both parties have a lot to lose in a long dispute.
UPS CEO Carol Tome has been predicting a no-strike deal.
“We are aligned on several key issues,” he said in April. “While we expect to hear a lot of noise during the negotiation, I remain confident that a win-win contract is very feasible and that UPS and the Teamsters will reach an agreement by the end of July.”
Teamsters general president Sean O’Brien, while acknowledging the progress that has been made, declines to say whether or not he believes a strike is likely.
“When you get into the meat and potatoes of wages and benefits, things can get very dangerous, very controversial,” O’Brien told CNN last week. “Our goal is to get the best deal to avoid a strike.”
A promising indicator of a deal came this week when UPS and Teamsters negotiators reached a tentative agreement on a crucial issue in contract negotiations: the gradual installation of air conditioning across its fleet of 95,000 delivery vans.
“The odds of a strike are as high as they have been since 1997, but still less than 50%,” said Alan Amling, a fellow at the University of Tennessee Supply Chain Institute and a former UPS executive.
“Both UPS and the Teamsters know that the volume they have left during a strike would be lost forever because there are alternatives. If that happens, it’s mutual destruction,” he said.
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