Warnings Issued About Looming UPS Strike, Affecting 30 Percent of Parcels

Teamsters march on May Day in Los Angeles on May 1, 2018. (David McNew/Getty Images)

A U.S. retail industry group on July 19 urged the Teamsters Union and United Parcel Service (UPS) to come to an agreement to avert a strike, warning that it could cause billions of dollars in economic losses.

The Teamsters and UPS have until July 31 at midnight to reach a new contract deal for hundreds of thousands of truck drivers and warehouse workers. A key sticking point in the talks is pay increases for experienced part-time workers who are making roughly the same or even less than new hires because starting wages jumped because of the labor shortage in the past few years.

The Retail Industry Leaders Association (RILA) stated that major supply chain issues would unfold if the union goes on strike.

“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 in a statement.

Any disruption to the business of UPS would be broadly felt because the company handles about a quarter of the parcel shipments in the United States—including deliveries for Amazon, prescription drugs for hospitals and doctors, and inventory for millions of small businesses. A 10-day strike could cost the U.S. economy more than $7 billion, according to a recent estimate from Anderson Economic Group.

UPS is the second-largest ground carrier of packages in the United States, only behind the U.S. Postal Service. The company delivers roughly 20 million packages per day, according to the firm.

Logistics publication Freightwaves noted that UPS handled about 18.6 million parcels per day in the United States in the first quarter. In the event of a strike, the delivery of about 30 percent, or 4 million parcels per day, could be affected, it stated.

“Just in general, in the e-commerce space, people need to be expecting more delivery delays,” Jason Miller, interim chair of the department of supply chain management at Michigan State University, told USA Today. “Even with Amazon, even for folks who get the Amazon deliveries from the post office, there could be some delays.”

Regardless of the outcome, UPS customers may face higher shipping rates, analysts have said.

A UPS driver departs a company facility on West 43rd Street in New York on May 9, 2017. (Don Emmert/AFP/Getty Images)

“A new Teamsters deal could drive the cost per piece (about) 2 percent higher than current expectations,” Susquehanna analyst Bascome Majors said in a client note this week, Reuters reported.

Recent Statements

Several days ago, the head of the Teamsters, Sean O'Brien, said he has asked the White House to not intervene in the event of a strike.

“My neighborhood where I grew up in Boston, if two people had a disagreement and you had nothing to do with it—you just kept walking,” Mr. O’Brien said in response to a question about his conversations with the Biden administration. “We don’t need anybody getting involved in this fight.”

Previously, before talks broke down, both the UPS and Teamsters reached a preliminary agreement on multiple issues, including putting air conditioning in trucks and getting rid of its wage system for drivers who work on weekends.

Earlier this month, UPS stated that it'll temporarily start training nonunion employees in the United States to step in if a strike occurs.

“While we have made great progress and are close to reaching an agreement, we have a responsibility as an essential service provider to take steps to help ensure we can deliver our customers’ packages if the Teamsters choose to strike,” UPS said in a statement.

In response, Mr. O'Brien said the Teamsters can still “shut this company down if need be” because the job “is very skilled, whether you’re a part-timer or a full-timer, and there’s no way that scabs can do our work.”

“UPS can’t train enough managers to do what you all do every single day,” O’Brien said. “They can’t stand in the heat in the back of the truck. They can’t load package cars. They can’t unload trailers. We will win this fight.”

UPS also has previously downplayed the possibility of a strike.

“The results do not mean that a strike is imminent and do not impact our current business operations in any way,” the firm stated on June 16. “We continue to make progress on key issues and remain confident that we will reach an agreement that provides wins for our employees, the Teamsters, our company and our customers.”

While the Teamsters have accused UPS of making record profits in recent years, in the first quarter of 2023, profits, volume, and revenue have all dropped year-over-year. The company also warned of a possible economic downturn around the world.

“While we expect to hear a great deal of noise during the negotiation, I remain confident that a win-win-win contract is very achievable and that UPS and the Teamsters will reach [an] agreement by the end of July,” UPS CEO Carol Tomé also said in April.

Mr. O'Brien has said that without an agreement in place, the Teamsters will go on strike starting on Aug. 1.

Reuters contributed to this report.