Several weeks ago, 93% of UPS package workers* authorized their union to strike if a deal couldn’t be reached with UPS management to replace the existing contract by the July 31stexpiration. The vote undoubtedly gave the union more leverage and ramped up pressure on both sides to get a deal done.
While it looks like a strike has been averted with a tentative deal between UPS management and labor negotiators on June 21st, the possibility of a labor disruption still exists until the agreement can be ratified. Union dissidents are reportedly upset over several of the outcomes of the new, tentative labor agreement with concerns over “hybrid” driver status, potential Sunday hours, annual wage increases less than the rate of inflation, and concerns over ongoing management harassment.
Some UPS rank and file union workers are denouncing the outcome as a “sellout” deal. Teamsters and UPS will continue negotiations on July 9thand, ultimately, a vote will be held.
For many shippers, this was not the first time they’ve had to deal with the possibility of a UPS strike. In 1997 the threat became a reality as workers walked out for more than two weeks. Some UPS customers learned a hard lesson about carrier diversification and the inherent risks associated with being overly reliant on a single carrier. Those shippers who have taken critical steps to mitigate the impact of another strike are obviously in a better position to withstand one should it happen again.
But what about those shippers who either didn’t experience the 1997 strike or those who did but didn’t learn their lesson? What can those shippers — and all other shippers for that matter — do to ensure that, if UPS workers go on strike this year or at any time in the future, their packages will still get picked up and delivered?
After 1997, many shippers took steps to diversify their carrier mix. Many switched their primary carrier to FedEx (whose driver force remains mostly non-union), while others simply engaged alternative carriers like FedEx, USPS, DHL and regional carriers to carry at least a small percentage of their overall volume. With systems in place to facilitate multi-carrier routing and operations, those shippers are much less likely to have lost sleep over the past few weeks as talks between teamsters and UPS management dragged on.
Even though a strike has likely been averted, smart shippers would still be wise to reach out to alternative carriers to begin the process of diversification and modal optimization. It shouldn’t take the threat an imminent strike for shippers to take action! Talk to all your carrier reps, get pricing in place and maybe even do some testing or move a small percentage of your volume away from UPS. You’ll sleep better at night if you do.
As part of that effort, shippers would be smart to do a thorough evaluation of their TMS platform to ensure that it is carrier agnostic and allows for the seamless implementation of new carriers.
It’s also worth noting that carrier diversification can have a positive impact on your parcel program beyond strike impact mitigation. Strategically introducing alternative carriers can reduce costs and improve transit times as well. Modal optimization, or the utilization of alternative carriers for certain segments of your volume for price or time in transit considerations, is a smart business practice. Modal optimization allows a shipper to take advantage of each carrier’s strengths (while avoiding their weaknesses) while also keeping carriers hungry for that piece of the business that they don’t carry. This can be great leverage for future pricing discussions!
Of course, carrier diversification is not without risk and complexity. Understanding what volume can be moved without negatively impacting costs with your primary carrier is a critical piece of the puzzle. A complimentary modal optimization assessment from Shipware can help you understand which carriers would be appropriate to consider, and measure critical items like cost and time-in-transit impact. Good luck!
*Of those who voted. Voter participation numbers have not been released.