Pending UPS Strike Will Likely Disrupt The Package Delivery Sector

A United Parcel Service (UPS) driver loads a cart with boxes before making a delivery in San Francisco on June 17, 2014. Justin Sullivan/Getty Images

A looming strike by the United Parcel Service could disrupt deliveries, in the largest strike against a single employer in American history.

Contract negotiations between UPS and the Teamsters stalled last week, raising the likelihood of a strike in early August, as well as major disruptions in a highly competitive package delivery market.

On June 16, the Teamsters Union, which represents about 340,000 workers at UPS, voted overwhelmingly at 96 percent to authorize a strike if no agreement was reached by the time the current contract expires on July 31.

Workers across the country are already holding practice picket lines.

UPS posted an adjusted profit of nearly $14 billion in 2022, which the Teamsters point to as evidence that the company can and should increase workers’ wages.

“If this multibillion-dollar corporation fails to deliver on the contract that our hardworking members deserve, UPS will be striking itself,” Teamsters President Sean O'Brien said in a statement.

“The strongest leverage our members have is their labor, and they are prepared to withhold it to ensure UPS acts accordingly.”

Consumers, businesses, and major industries across the country could see significant delays in deliveries.

Negotiations Fall Through Between UPS And Teamsters

UPS alleged that the union walked away from the bargaining table last week, but the Teamsters have placed the blame on the company for failing to meet their demands.

The last time UPS workers went on strike was in 1997, which lasted 15 days and cost the company $850 million.

FedEx and the USPS were forced to pick up the slack, as the nation’s largest package delivery service was to fulfill its duties.

The New York Times reported that year that small businesses were struggling to restock their shelves while hospitals had a hard time securing vital supplies.

The union has grown since its last work stoppage 26 years ago, from about 185,000 members to 340,000.

The union is seeking higher pay, along with the elimination of so-called two-tier wages, in which newer workers are paid less than older employees for the same job.

They also want the removal of surveillance cameras from delivery trucks and more full-time jobs.

Fifty-five percent of Teamsters-represented UPS employees work part-time, according to UPS spokesperson Jim Mayer.

Negotiations fell through last week due to the conditions part-time workers face.

“These part-timers are working at poverty wages,” Teamsters General President Sean O'Brien said on NPR last week.

“They need to drive the starting wage rate up, reward the people that have been there a long time, and provide [a] full-time opportunity for these folks.”

However, the Teamsters did secure a major win on June 14, after UPS promised to install air conditioning and two driver-facing fans in most trucks.

Heatstroke has been a significant concern for UPS workers, with many incidents of drivers falling ill due to overheating in their vehicles.

Package Delivery Services to Face Severe Disruptions in a Strike

The shipping company is now more vulnerable than before to losing business in the event of a strike since then, due to more competition.

Once the dominant package delivery service in the United States, in 2021, UPS only had 37 percent of the market by revenue, followed by FedEx at 33 percent, the USPS at 17 percent, and Amazon Logistics at 12 percent, according to the Pitney Bowes Parcel Shipping Index.

Analysts warn that UPS' competitors would not be able to handle the backlog created by a strike.

The company delivered an average of 24.3 million packages per day last year, a quarter of all U.S. parcel volume, according to UPS, which is far more than its competitors can absorb.

“Taking that kind of capacity out of the market, even for a day, will have significant ripple effects,” Terry Esper, a logistics professor at Ohio State University, told NPR.

Census data from 1999 showed that less than 1 percent of total retail trade sales came from e-commerce when data was first reported, but by 2023, it was 15 percent.

“In the event of a market disruption, no carrier can absorb all UPS volume,” wrote FedEx executives in a July 6 internal company memo obtained by NPR.

FedEx is urging shippers to “begin shipping with FedEx now,” read the memo.

“As customers are inquiring about available capacity at FedEx, we have been really clear that, yes, of course, we would entertain any good business, and we'd love to talk to them,” said Brie Carere, chief customer officer at FedEx, at the company’s first-quarter earning call.

USPS spokesperson Dave Partenheimer said the Postal Service has the capacity to “deliver what is tendered to us.”

UPS is also taking note of the risk of losing customers to rivals, with CEO Carol Tomé announcing over an April earnings call that the company had assigned 127 “high-impact executives” to update major customers on “our ongoing negotiations with the Teamsters and to keep them with us.”

A Teamsters strike could also raise the cost of shipping and cause another round of supply chain disruptions.

Even if rival delivery companies refuse to increase their rates amid the strike, UPS customers may need to turn to these higher-priced competitors or pay for expedited shipping due to longer delivery times.

It may not be “an immediate change in prices, (but) it is maybe leaning into some direct payments for more expedited shipping in order to support the delivery of really important and key things like medications,” said Mr. Esper.

The Epoch Times reached out to UPS and the Teamster Union for comment.