How Would a UPS Strike Affect Shippers?

UPS Strike

If your business relies on parcel shipping, there’s a good chance you’re keeping a closer eye on the inner workings of UPS this month.

UPS employees represented by the Teamsters union voted overwhelmingly in favor of authorizing a strike last week. The authorization comes amid negotiations to replace the current five-year contract that expires July 31.

Here’s what we know right now:

  • Nothing will happen before July 31: The current agreement is in effect through the end of next month, and union members will stay on the job for the duration of the contract.
  • Effects could ripple through the economy: UPS ships about 6% of the country’s gross domestic product around the US, per Axios. Stopping those shipments could cause a disruption that reaches far beyond UPS customers.
  • A strike could be the largest in decades: UPS currently employs about 260,000 union members — an increase of 40,000 Teamsters in the past five years, CNN reports.

What Could a UPS Strike Mean for Shippers?

While it’s important to follow the latest developments, it is still too early to predict whether a strike will occur. Unions authorize strikes in nearly all instances, and members stay on the job throughout the current contract, CNN notes.

Negotiations are expected to continue until a new agreement is reached, or August 1 — when the current contract expires. UPS expressed optimism that both sides can reach an amicable agreement before the deadline, USA Today reports.

“This does not mean a strike is imminent,” UPS spokesman Glenn Zaccara told the news outlet in an email. “The reality is that UPS and the Teamsters have already reached tentative agreements, subject to ratification, on a wide variety of non-economic issues.”

Zaccara declined to comment on how a strike may impact the carrier’s service, USA Today reports.

Denis Taylor, director of the Teamsters Package Division and co-chairman of the Teamsters National UPS Negotiating Committee, told the news outlet that “the company’s initial economic proposals do not address our members’ needs.” More than 90 percent of employees voted in favor to authorize the strike if negotiations break down.
“It is very helpful to have the members’ backing as we work toward negotiating strong contracts at UPS and UPS Freight,” Taylor said in a statement to USA Today.

While negotiations have been ongoing for a few weeks, this authorization comes as both sides negotiate proposals in two key areas, according to Axios:

  • Sunday service: The carrier introduced Saturday service last year, and has proposed expanding deliveries to Sunday.
  • Pay raises: Both sides are considering a proposal to create a two-tier wage system. The proposal would turn part-time workers, who earn $15 per hour, into full-time workers at the same pay. However, current full-time employees earn an average of $36 per hour. Union members are divided on this issue, which would make a strike more difficult.

UPS Workers Last Went on Strike in 1997

UPS employees last went on strike more than two decades ago when 187,000 union members walked off the job for 16 days. The parcel carrier lost hundreds of millions of dollars in what was one of the largest strikes at the time.

But the parcel industry and the economy as a whole, has changed dramatically since August 1997. Most notably, e-commerce was in its infancy, and Amazon was an online bookstore that had just had an initial public offering.

Today, not only do UPS shipments comprise a portion of the country’s GDP, an estimated 7% of UPS’s total shipping business comes from one major customer: Amazon.

Here’s why the Amazon factor matters: Should UPS be unable to handle the e-commerce giant’s shipments, it may shift business to the U.S. Postal Service — which brings up another key variable. Will President Donald Trump intervene in a UPS strike?

In 1997, President Bill Clinton refused to stop the strike despite having the legal authority to do so, as Fortune notes; however, Labor Secretary Alexis Herman urged the two sides to remain at the negotiating table for an intense 80 hours of talks over five days. This is largely credited with shortening the strike of 1997.

In 2018, it’s difficult to predict whether President Donald Trump would invoke the Taft-Hartley Act and order an end to a strike. It’s also unclear whether Trump would instruct Secretary of Labor R. Alexander Acosta to do the same, as Fortune notes.

Here’s why: Trump is not a fan of the relationship between the USPS and Amazon. In a series of tweets earlier this year, Trump criticized the postal service for not charging Amazon enough and claimed the retail giant doesn’t pay its fair share of taxes.

Because Amazon comprises a significant portion of UPS business, the two companies are more closely linked than one might expect. As Fortune notes, ending a strike in this situation could be beneficial to Amazon, which raises the possibility that Trump will not intervene and instruct his administration to do the same.

We’ll be watching the situation closely over the next couple of weeks, and updating this post as new information arises.

If you have questions about how this may affect you specifically, or what options you may have if the strike comes to fruition, please reach out. We’re happy to answer any questions you may have. 

The Reveel App uses AI and machine learning to provide an unparalleled look into what’s impacting your bottom line. Through invoice audits, peer benchmarking, and rate modeling/simulations, you can see the health of your operation and assess pricing changes from parcel carriers like FedEx and UPS. Sign up for a free Reveel account today to see how you can leverage automation to synthesize your data, ship more for less, and reduce the time needed to identify issues and action items. 

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