RILA on Potential UPS Strike: ‘Kryptonite for Supply Chains’
Retailers are starting to get anxious about a possible UPS worker strike on Aug. 1.
In a statement released Wednesday, the Retail Industry Leaders Association (RILA) shared its dismay with the stalled contract negotiations between UPS and the 340,000 workers represented by the International Brotherhood of Teamsters.
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“Reliable and quick shipping—ensuring the timely delivery of essential goods such as groceries, medicine and school supplies to customers’ doorsteps—is the hallmark of our industry and the UPS fleet plays a critical role in that operation,” the statement read. “Uncertainty is like kryptonite for supply chains.”
A strike would risk disruptions to nearly 40 percent of U.S. courier operations, according to data from Everstream Analytics. While it is easier for retailers today to diversify their carriers compared to when the 1997 UPS strike occurred—which lingered for 15 days and cost the company $850 million—no merchant will be insulated from any potential slowdown.
“While competitors like FedEx, USPS and Amazon have the capacity to handle some of the transferred load, no U.S. carrier has sufficient capacity to handle all of it in addition to their own normal courier volumes,” said Mirko Woitzik, Everstream’s global director of intelligence solutions. UPS handled an average of 20.8 million packages per day in the U.S. in 2022, with Pitney Bowes estimating it ships 24 percent of total parcel volume in the country.
Although FedEx said it will be accepting additional parcel volume for a limited time ahead of the strike, retailers should be forging relationships with smaller shipping companies alongside the bigger names, according to Charles Haverfield, CEO of U.S. Packaging & Wrapping.
“The best approach is for businesses to cast their net wide,” Haverfield said. “Be sure to review the terms and conditions within your carrier contract regarding service disruptions and alternative arrangements first to identify any penalty clauses that may apply.”
RILA also exercised caution about wider impacts to the overall economy, highlighting that while retailers can often be adept at navigating supply chain challenges, a strike would result in “billions of dollars” lost.
“Retailers are preparing contingency plans, but even the most robust planning won’t shield retailers or consumers from the impact of shutting down a key component in the supply chain as we head full-steam into back-to-school and then holiday shopping seasons,” RILA said.
One think tank, Anderson Economic Group (AEG), tagged a potential 10-day work stoppage at more than $7 billion in total economic losses, with UPS customers bearing the brunt of those losses at $4.6 billion.
“The impact of a supply chain disruption is no longer an academic exercise,” the association said. “We need only look in our rear-view mirror to see the economic and consumer harm that resulted from supply chain bottlenecks and delays that rippled throughout the economy post-pandemic. Having worked through these challenges methodically over the past two years, retailers are loathe to stress-test contingency plans again.”
Haverfield said e-commerce retailers in particular are the most at risk of negative fallout from a potential UPS strike. He noted that these retailers should currently be bulk ordering whenever possible.
“With fewer deliveries being made, businesses can expect production delays and inventory shortages caused by transportation disruptions, hindering the overall functioning of businesses,” Haverfield said. “Being proactive and ensuring stock levels are well-maintained ahead of the strike deadline could save a headache later on.”
The trade association concluded in its statement that it was optimistic a resolution could be reached, while urging all negotiating parties to remain at the table until a deal is struck.
The Teamsters and UPS have until July 31 to reach a new contract agreement. The union’s outspoken general president, Sean O’Brien, has been unyielding in his conviction that Teamsters-represented employees will strike on Aug. 1 without a deal in hand. The talks have remained at a stalemate since July 5.
O’Brien even asked the White House to stay out of the union’s contract negotiations, with Acting Labor Secretary Julie Su reiterating that she has not yet seen a need for federal intervention.
Ironically, on Wednesday morning, the Teamsters Twitter account retweeted a tweet from the handle of President Joe Biden, who is seen pictured with a union worker for the International Brotherhood of Electrical Workers.
Unions built the middle class. pic.twitter.com/Q8khYrB9VP
— President Biden (@POTUS) July 19, 2023
Although the two sides have come together on a collection of issues, such as dissolving the “22.4” two-tier wage classification for hybrid workers, ending forced overtime on drivers’ days off and installing air conditioning in the package carrier’s iconic brown delivery vehicles, they are still far apart on wages.
The starting UPS part-time wage is now a minimum of $16.20 as mandated for federal contractors. UPS’ offer to raise part-time wages amounts to “crumbs,” according to O’Brien. That offer has not been made public.
