The Teamsters Union and UPS are reportedly still engaged in discussion, hoping to come to an agreement before the July 31 deadline and proposed Aug. 1 strike.
However, with UPS still balking at the idea of the increase in pay for part-time drivers, the union, which represents 340,000 UPS drivers, is prepared to go on strike next week.
PACKED HOUSE at UPS “practice” strike this morning in Los Angeles:
340,000 UPS workers are preparing to walk off the job when their union contract officially expires July 31. This will be one of the largest labor actions in U.S. history. pic.twitter.com/ioG251i4ui
— People's City Council – Los Angeles (@PplsCityCouncil) July 19, 2023
This would, obviously, put an enormous strain on the economy and promotional products industry. UPS handles about a quarter of the nation’s small-package delivery, with FedEx just behind at around 20%. Should UPS go on strike, not only would that impact everyone who uses UPS, but also those who use other logistics firms, as their networks would suddenly be inundated with other customers moving their packages from the UPS network.
The primary issue would be that, should a strike happen, all packages currently in the UPS network would likely just freeze in place until the strike is over. That means that if you were to ship something later this week, and the strike goes forward next week, your package could be stuck at the last checkpoint before being delivered to the customer.
So, naturally, you’d likely want to move business away from UPS to another like FedEx.
That’s the other problem, according Sterling Wilson, president and founder of Philadelphia-based Pop! Promos: There’s a plan B, but it comes with its own set of consequences that promotional suppliers and distributors need to be aware of.
“I think everyone’s back-up plan is generally, ‘We’ll just ship it with FedEx,'” he says. “fedEx — I’ve been talking with their executives over the last couple of weeks — they’re not going to be able to pick up more than about 10% of the volume UPS can carry. There’s just not enough people, there’s not enough trucks, there’s not enough warehouse space. It’s just not going to happen.”
That means if you’re business that primarily uses UPS but suddenly wants to switch to FedEx, you might be out of luck. Wilson says that FedEx could simply not pick up scheduled pickups if you’re a new customer. And for those that do use FedEx to some extent, the company would likely not pick up much more than it already does in an effort not to gum up its own network.
“If you usually ship 100 packages a day with FedEx, and now you’re trying to ship 300, they’re not going to take it,” Wilson says. “They’ll say, ‘We’ll take 110.’ There just isn’t a way to get them in the network.”
If the network does become over-stuffed, it could result in delays, lost packages, and other issues that promotional products distributors would need to warn their clients about.
That’s really the most reasonable plan B Wilson could think of. They’ve tried to piecemeal their packages out of UPS by shifting international orders to other companies like DHL, FedEx, and AirFreight. Domestically, as of tomorrow, Pop! Promos is shifting everything it can to FedEx, as Wilson says, to the extent that they’ll collect it. But, the bottom line is that they have had to have conversations with distributors about the simple fact that things are likely going to be late.
“We’ve called all of our clients who have orders and who want to ship on their UPS account, and told them we really encourage them to shift it to FedEx,” Wilson says. “I think a lot of people are thinking, ‘If there’s a strike, then I’ll do this.’ But the reality is if a lot of your packages are already in the network, you’re going to have a problem. And what can you do? My best advice is just go out proactively to clients so they’re not surprised, and just let them know if UPS shuts down, there just isn’t enough capacity. Stuff’s going to be delayed. We’re going to put labels on things with FedEx and some of it’s not going to get picked up.”
The last UPS strike was in 1997, and lasted 15 days. A shutdown of more than two weeks would cause lasting effects in the supply chain, too, even when things get back up and running. The machine would need time to warm up and process backlog. Wilson speculated that a similarly long strike would result in a recovery period of more than a month.
“You shut part of the system down for a couple weeks, you’ve now got a backlog that even a system running 110% working overtime will take weeks to clear,” he says. “It’s really disruptive.”
While he didn’t speculate on which side of the bargaining table would come out with a win, he did recognize that the teamsters “have a pretty good hand.” There’s precedent in recent contract disputes that would point to UPS giving the union what they’re asking for and a strike being avoided.
Regardless, Wilson says it’s not smart to assume anything, and the best course of action is to move packages wherever possible to ensure that they won’t be frozen in the network, and mostly to communicate with end-buyers about the reality of the situation.
“I woulds ay the more distributors are proactive in telling [end-buyers] about potential delays and about potential problems so it’s not a surprise, the better,” he says. “And just a reminder that everyone is going to want their packages through that FedEx network when they have half as much capacity as they need. And even if the largest distributor in the country only ships FedEx, and they send us their account numbers and we ship it, even if they’re so big and do so much with FedEx, [it] doesn’t mean their package is getting picked up. … The more everyone can just be prepared and be patient. They’re going to get a log of people calling and saying, ‘I need my package on this truck,’ and it’s not going to happen, and it’s going to be tough.”
