Twenty-five years ago, the UPS strike by 185,000 workers brought the logistics giant to a standstill. The 15-day strike reduced package deliveries, overwhelmed the US Postal Service and FedEx, and hurt 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 between the company and the union in contract talks. If a strike occurs, it would be the largest single-employer strike in United States history.
The strike will begin. As consumers Head into the back-to-school season and retailers will be gearing up for the biggest holiday stretch of the year.
Jeff Haynes/AFP/Getty Images/FILE
In the year Impressed UPS workers in Chicago in 1997, the last major UPS stop.
How bad can it be? Logistics experts predict a short UPS strike in 2018. It will not be as terrible as it was in 1997 because things have changed in the middle quarter of a century: for example, there are more shipping options. However, if the strike lasts for more than a week, they say there will be empty shelves, higher prices and slower delivery of packages to customers.
In the worst-case scenario, a prolonged UPS strike could cause major disruptions to the US supply chain network.
In the year Shippers have more options than they did in 1997: FedEx and regional carriers have grown since then, and Amazon’s logistics operations didn’t even exist then.
Walmart, Target and other retailers have built their own last-mile delivery operations and given customers the option to shop online and pick up their orders in stores. Gig companies like Uber have also entered the market to offer.
“The big lesson from that strike was to diversify,” says Kathy Roberson, head of logistics trends and insights, a supply chain research firm.
Richard Drew / AP
UPS and Teamster’s union contract expires on August 1.
The economy has slowed and many consumers have pulled back on must-have items like electronics and clothing. That means demand isn’t as high as it once was during the pandemic, and retailers won’t need to bring in as many items for back-to-school shopping and the holidays. In fact, many companies are currently stuck with excess inventory.
UPS’s revenue in the first quarter fell 6 percent from a year earlier, and in April it said it expected “volume to remain under pressure.”
“If you look at the overall market, no one is looking at lifting anymore,” Roberson said. “Economically, we’re going to have a very muted peak season.”
Businesses also had time to strike.
For months, FedEx and other carriers have encouraged shippers to avoid UPS to avoid delays from the strike.
According to global shipping and logistics firm Pitney Bowes, UPS delivers about a quarter of all U.S. packages to their final destination, and there is not enough capacity in the market to replace UPS. Because packages delivered by the US Postal Service are handled by UPS, the shipping portion is higher than the number listed.
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, lower in the pecking order than big-box chains, will see the most delays from a long strike, logistics experts say.
“Large retailers have contingency plans,” said John Haber, chief strategy officer of third-party logistics provider Transportation Insight Holding Co., who has worked in UPS’s corporate finance office for more than a decade.
Businesses and customers in rural areas will also be affected by a prolonged strike.
“If you go outside for three days, you start going into the danger zone,” he said in remote areas. “That’s when things start to get in the way. And then you go backwards.
Logistics experts generally believe that an extended strike will have a negative impact on businesses and the economy. Both sides have a lot to lose in a protracted dispute.
UPS CEO Carol Tome predicted a deal would be reached without a strike.
“We’re aligned on a lot of key issues,” she said in April. “While we expect to hear a lot of noise during the negotiations, I am confident that a win-win contract is very much within reach, and that UPS and the Teamsters will reach an agreement by the end of July.”
Teachers’ group general president Shane O’Brien, while acknowledging progress, declined to say whether he thought a strike was likely.
“When you get into the meat and potatoes of salary and benefits, things can get very messy, very controversial,” O’Brien told CNN last week. Our goal is to find the best deal to avoid a strike.
A promising sign of a deal came this week when UPS and Teamster negotiators reached a tentative agreement on a key issue in contract talks: installing air conditioning — gradually — on a total of 95,000 delivery vans.
“Strike odds are as high as they’ve been since 1997, but still below 50%,” said Alan Amling, a fellow at the Tennessee Supply Chain Institute and a former UPS executive.
“Both UPS and the Teamsters know that the volume they’re going to release during a strike is going to be good because there are options. If this happens, it’s a collective disaster,” he said.