UPS impasse with union could deliver a costly strike
Talks between the International Brotherhood of Teamsters and UPS over a new contract fell apart on July 5, 2023. The union and the shipping and logistics company are blaming each other for the collapse, which occurred a few weeks after 97% of UPS’s Teamsters voted to strike if the Teamsters and UPS don’t reach an agreement by midnight on July 31.
Without a deal in place, more than 300,000 Teamsters will stop working on Aug. 1. It would mark the delivery service’s first strike since 1997.
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The Conversation asked Jason Miller, a supply chain scholar at Michigan State University, to explain how likely it is that this will happen and what to expect if it does.
What should consumers expect?
If unionized UPS workers do go on strike, many U.S. consumers will surely fear delays in the delivery of their online purchases. In my view, that’s a reasonable concern, given that UPS handles roughly 25% of all U.S. package deliveries.
The 1997 strike, which lasted 16 days, took place when e-commerce was in its infancy. The Census Bureau only began to track that slice of the economy in 1999, when online shopping amounted to about 0.6% of all retail sales. Today, consumers spend about 15% of their shopping dollars on e-commerce purchases.
If a strike were to happen, UPS competitors, including FexEx Ground and the United States Postal Service, would likely be able to handle about 20% of UPS’s deliveries because the industry currently has some excess capacity.
That’s due to delivery workers clocking fewer hours per week today compared to the height of the COVID-19 pandemic. Parcel delivery demand peaked in 2021, when millions of Americans were still social distancing.
If a prolonged strike happens, UPS could lose up to 30% of its business, experts warn, as customers switch to rival services.
The risk of losing market share is leading many industry experts to believe that if a strike were to occur, it wouldn’t last long.
What about businesses?
Roughly 57.3% of the packages UPS delivers are shipped straight to consumers. The rest go to retailers and other businesses.
Based on my years of researching transportation operations and supply chain disruptions, I believe Americans should recognize that the impact of a UPS strike would stretch far beyond delayed delivery of everything from pet food to tennis rackets that they buy online.
A UPS strike could disrupt the availability of spare parts for cars and wholesale medical supplies, just to name a few essentials. Consumers will also find it harder to get clothing and shoes in stores, as retail locations are typically replenished by parcel carriers.
The supply chain for manufacturing computer and electronics products would probably be disrupted too, according to my analysis of data from the Census Bureau and the Bureau of Transportation Statistics that tracks how different industries transport products to their customers.
