How likely is a UPS workers strike and how would it affect shipping?
Time is running out for negotiations to avert the largest strike against a single employer in US history. Contract negotiations between UPS, the largest shipping company in the US, and its workers’ union have stalled less than a month before the union contract expires on 31 July. Without a contract, the union said that its 340,000 fulland part-time workers will strike, something that would significantly disrupt the US economy.
Here’s what we know so far about negotiations and the potential strike:
Why are UPS workers potentially striking?
UPS workers have been pushing for higher pay, more full-time jobs and better workplace health and safety conditions.
The company and its union have been in intense negotiations over its contract over the last month and have come to a few agreements, including getting rid of its two-tier programs for drivers which means some part-time drivers are paid less than full-time drivers on an hourly basis. The company has also tentatively agreed to make Martin Luther King Jr Day a holiday and has agreed to install air-conditioning units in more of its trucks, since heat is a growing hazard for drivers as temperatures continue to soar.
But the union for UPS Workers, International Brotherhood of Teamsters, known as Teamsters, said the company had not agreed to all of their demands.
In the early hours of 5 July, negotiations broke down with both sides saying that the other walked away from the negotiating table.
“This multibillion-dollar corporation has plenty to give American workers – they just don’t want to,” said the Teamsters general president, Sean O’Brien, in a statement. “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”
“The Teamsters have stopped negotiating despite historic proposals that build on our industry-leading pay,” UPS said in a statement. “Refusing to negotiate, especially when the finish line is in sight, creates significant unease among employees and customers and threatens to disrupt the US economy. Only our non-union competitors benefit from the Teamsters’ actions.”
How likely is a strike at this point?
It is unclear when and if UPS and the union will go back to the negotiating table. Even before talks broke down, O’Brien said that a strike appeared “inevitable”. The stickiest point between the two parties appears to be over pay increases.
If the current contract ends up expiring on 31 July without a new one to take its place, the union could start its strike as early as 1 August. The Teamsters have been holding rallies and practice pickets around the US in preparation for the possible strike.
What happens if there is a strike?
There will probably be significant delays and increased costs in shipping around the country. UPS is the largest private shipping company in the country, just behind the US Postal Service (USPS) as the largest delivery company. The company handles about a fourth of all packages in the US, shipping 5.2bn parcels in 2022. FedEx, in comparison, shipped 4.1bn packages last year.
USPS and FedEx both released statements that essentially encouraged UPS customers to act fast and start using their services, in anticipation of a strike. USPS announced the launch of the USPS Ground Advantage program that offers coast-to-coast delivery in two to five days.
“We are ready to compete for an increased share of the growing package business,” Louis DeJoy, US postmaster general, said in a statement.
FedEx said that the company’s priority was “protecting capacity and service for existing customers”.
“Therefore, shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to begin shipping with FedEx now,” the company said.
Even though USPS and FedEx could take on some UPS customers, the companies will not be able to handle the 24.3m packages UPS delivers a day in addition to their existing loads.
How will UPS be affected by a strike?
A 1997 UPS strike that lasted 15 days cost the company a total of $850m at the time. A New York Times report of the strike from 1997 said that small businesses struggled to restock their shelves, while hospitals had a hard time getting needed supplies. USPS and FedEx were overloaded with packages and cut overnight delivery services. And now, e-commerce sales are over 15 times what they were then.
Bloomberg estimated UPS could lose about $170m a day with the strike, based on its latest revenue reports. With the growth of online shopping during the pandemic, UPS has posted record profits over the last two years, with revenue in 2022 reaching $100bn for the first time in the company’s history. But the meteoric growth seen in the pandemic has slowed, and a potential strike has loomed over the company over the last few months. Given UPS’s share of the shipping industry, any major loss of customers will probably be temporary, but will still cost the company millions.