June 13, 2024

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What could a possible UPS strike mean for your packages?

What could a possible UPS strike mean for your packages?

A UPS strike by 185,000 workers 25 years ago ground the logistics giant’s operations. The 15-day strike has curtailed package deliveries, dumping the US Postal Service and FedEx, and hurting businesses across the US. There is no agreement to hold talks between the company and the union. If a strike occurred, it would be the largest single employer strike in US history. Business disruption will also begin as shoppers head into the back-to-school season and retailers prepare for the peak holiday period later in the year. How bad can it get? Logistics experts predict that the short UPS strike won’t 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 more than a week, there will be some empty shelves, higher prices and slower package deliveries to customers, they say. Supply Chain Network More Choice Shippers now have more choices than they did in 1997: FedEx and regional carriers have grown since then, and Amazon’s logistics operations didn’t exist then. Walmart, Target, and other retailers have also built their own last-mile deliveries and provide customers with the option to buy online and pick up their orders in stores. Since then, gig companies like Uber have entered the market to provide services as well. “The big lesson from this strike is diversification,” said Cathy Roberson, president of the supply chain research firm. The economy has slowed and many consumers have given up on discretionary goods such as electronics and clothing. This means that demand isn’t as high as it was earlier in the pandemic, and retailers don’t need to bring as much inventory for shopping and school holidays. In fact, many companies are stuck with a lot of merchandise right now. UPS revenue fell 6% in the first quarter compared to a year earlier and said in April that it expected volume to remain under pressure. “Nobody generally sees a pickup anymore,” said Roberson. “From an economic perspective, we will have a silent peak season.” The companies also had time to prepare for the possibility of a strike. FedEx and other carriers have been encouraging shippers for months to stay away from UPS to avoid any delays in the strike. Strike sheets make about a quarter of all US packages reach their final destination, according to global shipping and logistics company Pitney Bowes. , and there is not enough capacity on the market to replace the UPS. Its share of shipments is also larger than that number he’s referring to since many packages delivered by the US Postal Service are carried by UPS. Overall, UPS handled an average of 18.7 million domestic packages per day in the first three months of this year, and logistics experts say small and medium-sized businesses lower in rank than big box chains will see the most delays due to the prolonged strike. . “Major retailers have contingency plans in place,” said John Haber, chief strategy officer at overseas logistics provider Transportation Insight Holding Company, who has worked for more than a decade on UPS’s corporate finance office. Long-strokes are also hardest hit, he said: “If you go out for three days, you start going into the danger zone” in the Outback. “This is when things really start to get smothered. Then you fall behind.” A deal may be likely Logistics experts generally believe that a prolonged strike with adverse effects on business and the economy will be averted. Both sides have a lot to lose in a drawn-out dispute, with UPS CEO Carol Twomey predicting a deal could be reached without striking a blow, saying in April: “We agree on many key issues.” “While we expect to hear a great deal of noise during negotiations, I remain confident that a win-win contract is very achievable, and that UPS and 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 thinks a strike is likely. “When you’re dealing with the meat and potatoes of wages and benefits, things can get very shady and very controversial,” O’Brien told CNN last week. “Our goal is to get the best deal to avoid a hit.” A promising sign of agreement emerged this week when UPS and Teamsters negotiators reached a tentative agreement on a crucial issue in contract talks: installing air conditioning — gradually — in its entire fleet of 95,000 delivery trucks. Strikes are as high as they have been since 1997, but still less than 50%, said Alan Amling, a fellow at the University of Tennessee’s Supply Chain Institute and former UPS CEO. “Both UPS and the Teamsters know the volume that leaves them during a strike,” he said. It will disappear completely because there are alternatives. It’s mutual destruction if that happens.”

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A UPS strike by 185,000 workers 25 years ago brought about Logistics giant’s operations to a standstill. slashed 15-day package deliveries, dumping the US Postal Service and FedEx, and Harm business 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 talks between the company and the union. If a strike occurred, it would be the largest single employer strike in US history.

It will also start to stop working as shoppers Head into back-to-school season and retailers are gearing up for the holiday rush later in the year.

How bad can it get? Logistics experts predict that the short UPS strike won’t 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 more than a week, there will be some empty shelves, higher prices and slower package deliveries to customers, they say.

In the worst case scenario, a prolonged UPS strike could cause major disruptions to the US supply chain network.

More options now

Shippers have more options than they did in 1997: FedEx and regional carriers have grown since then, and Amazon’s logistics operations didn’t exist then.

Walmart, Target, and other retailers have also built their own last-mile deliveries and provide customers with the option to buy online and pick up their orders in stores. Gig companies like Uber have since entered the market to provide services as well.

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“The big lesson from this strike was diversification,” said Cathy Roberson, president of Logistics Trends and Insights, a supply chain research firm.

The economy has slowed and many consumers have given up on discretionary goods such as electronics and clothing. This means that demand isn’t as high as it was earlier in the pandemic, and retailers don’t need to bring as much inventory for shopping and school holidays. In fact, many companies are stuck with a lot of merchandise right now.

UPS revenue fell 6% in the first quarter compared to a year earlier and said in April that it expected “volume to remain under pressure”.

“If you look at the market as a whole, no one is going to see a pickup anymore,” Roberson said. “From an economic perspective, we will have a silent peak season.”

The companies also had time to prepare for the possibility of a strike.

FedEx and other carriers own it He encouraged shippers for several months to stay away from UPS to avoid any delays from the strike.

hit odds

UPS delivers about a quarter of all US packages to their final destination, according to global shipping and logistics company Pitney Bowes, and there isn’t enough capacity in the market to replace UPS. Its share of shipments is also larger than that number he’s referring to since many packages delivered by the US Postal Service are carried by UPS.

Overall, UPS handled an average of 18.7 million domestic packages per day in the first three months of this year.

Logistics experts say small and medium-sized companies lower in rank than big box chains will see the most delays from the prolonged strike.

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“Major retailers have contingency plans in place,” said John Haber, chief strategy officer at third-party Transportation Insight Holding Company, who worked for more than a decade on UPS’s corporate finance office.

Businesses and customers in rural areas will also be hardest hit by the prolonged strike.

“If you go out for three days, you start going into the danger zone” in the hinterland, he said. “That’s when things really start to get smothered. Then it gets delayed.”

A deal might be likely

Logistics experts generally believe that a prolonged strike with adverse effects on businesses and the economy will be avoided. Both sides have much to lose in a protracted dispute.

Carol Twomey, CEO of UPS, predicted that a deal would be reached without a strike.

“We agree on many key issues,” she said in April. “While we expect to hear a great deal of noise during negotiations, I remain confident that a win-win contract is very achievable, and that UPS and Teamsters will reach an agreement by the end of July.”

While Teamsters General President Sean O’Brien acknowledges the progress that has been made, he refuses to say whether or not he thinks a strike is likely.

“When you’re dealing with meat and potatoes on wages and benefits, things can get very dicey and very controversial,” O’Brien told CNN last week. “Our goal is to get the best deal to avoid a hit.”

A promising sign of agreement came this week when UPS and Teamsters negotiators reached a tentative agreement on a crucial issue in contract talks: installing air conditioning — gradually — in its entire fleet of 95,000 delivery trucks.

“The odds of a strike are as high as they have been since 1997, but it’s still less than 50%,” said Alan Amling, a fellow at the University of Tennessee’s Supply Chain Institute and former UPS executive director.

“Both UPS and the Teamsters know that the volume that leaves them during a strike will disappear for good because there are alternatives. It is mutually destructive if that happens,” he said.