Will Parcel Shipping Take a Hit? Examining the UPS/Teamsters Negotiations and the Possibility of a Strike

The pandemic brought a surge in volume and record-breaking profits for UPS, a leader in parcel shipping, but now the Teamsters Union is demanding better compensation and their fair share of the pie. As negotiations unfold, the Teamsters are pushing for the following (among other key items): 

• Increased pay for part-time workers
• The elimination of a two-tier system
• Improved working conditions such as air conditioning in vehicles

The contract between UPS and the Teamsters is set to expire on July 31, 2023, with no intention of extending the deadline. But is there potential for a strike? Both parties have a lot to lose if no agreement is reached. 

In this article, we’re diving into the UPS/Teamsters negotiations, sharing our point of view on the possibility of a strike (which would be one of the largest in U.S. history), and offering guidance on how to best navigate this unprecedented time in parcel shipping. 

Where are the Teamsters and UPS at in their Negotiations? 

While the negotiations are far from over, within the past few weeks, the Teamsters made strides with UPS. The company agreed to:

• Install heat shields and fans in trucks to combat extreme heat conditions
• Eliminate the two-tiered wage system
• Acknowledge Martin Luther King Jr. Day as a holiday
• Put an end to forced overtime

Yet, on July 5th, the negotiations between the Teamsters and UPS came to an impasse as both sides could not agree on a final solution. In a press release, the Teamsters said, “Following marathon negotiations, UPS refused to give the Teamsters a last, best, and final offer, telling the union the company had nothing more to give.”

If the Teamsters and UPS can’t come to an agreement by July 31, the Teamsters will inevitably go on strike. What does this mean for parcel shipping in the U.S. and ultimately, across the world? 

The Outcome of a Potential Strike & its Effect on the Parcel Shipping Industry

In 2022 alone, UPS shipped 5.2 billion parcels throughout the U.S. According to ABC News, that’s “nearly a quarter of all parcels shipped in the country.” NPR reports that “UPS delivered an average of 24.3 million packages per day in 2022 — more than any competitor can take on.”

Disrupted deliveries, drastic shipping delays, and increased parcel shipping costs will be the most significant consequences of a potential strike. In June, 97% of UPS workers voted in favor of the strike. This is why it’s no surprise that parcel shippers across all industries are experiencing unease as the deadline for the negotiations looms closer.  

"If we were forced to go on strike because UPS didn't want to give these members what they deserve, it would cripple the company, this hub is crucial to UPS and the flow of their business," said Avral Thompson, the president of Teamsters Local 89, as reported by Courier Journal.

We agree. 

The Teamsters’ last strike in 1997 rattled not only UPS as a company, but the U.S. parcel shipping industry and overall economy as well. The 2-week strike, consisting of 185,000 workers, led to severe supply chain disruptions across the country. The potential strike in 2023 would consist of nearly double that number, with 340,000 workers, only increasing the possibility of economic damages in its wake.

Another concern comes from leaders in the labor industry as the Teamsters are also encouraging Amazon drivers to unionize. Earlier this year in April, “84 of Amazon’s delivery drivers and dispatchers in Palmdale, California joined Teamsters Local 396 and won a first contract.” Amazon has been pushing back on these efforts for years. But as the UPS and Teamsters negotiations continue to build steam, the greater incentive Amazon drivers have to demand their own set of workforce changes. The potential result? Even more turmoil will exist among the U.S. economy’s greater supply chain. 

How to Best Navigate the Current Uncertainty in Parcel Shipping 

While the possibility of a strike is looming, UPS remains optimistic that a mutually beneficial agreement can be reached. Currently, there is no clear indication of whether a strike will occur. At this time, parcel shipping organizations must stay tuned in to the Teamster/UPS negotiations. However, at LynnCo, we understand these times of uncertainty can be difficult to navigate. That being said, we recommend exploring alternative carriers such as FedEx or regional options. After all, the ability to adapt and adjust swiftly in the event of a strike will be crucial for shippers to thrive.

At the beginning of this year, and in preparation for the current Teamsters/UPS negotiations, FedEx created a campaign urging UPS customers to transfer their volumes before March 31, 2023. A transfer at that time would have helped ensure a company’s freight would be prioritized by FedEx. Today, those who switch their volumes from UPS to FedEx will likely go into a queue based on capacity. 

According to NPR, FedEx executives claim “In the event of a market disruption, no carrier can absorb all UPS volume.” However, “FedEx is urging shippers to ‘begin shipping with FedEx now.’”

Additionally, just a few days ago on July 10th, the USPS introduced a new shipping offering, USPS Ground Advantage. According to USPS’ statement, “USPS Ground Advantage provides America’s businesses and the public with a compelling new ground shipping option leveraging USPS’ unparalleled last-mile delivery route system and improving integrated mail and package postal logistics network.”

We expect this new parcel shipping service to help alleviate potential disruptions resulting from the impending Teamsters strike. 

Final Thoughts

The stakes are high as the Teamsters/UPS negotiations continue to unfold. The LynnCo team has been keeping a close eye on daily updates from both sides of the argument. Here’s what we know is certain:

“The shippers that win are the ones that are able to be nimble and adjust should a strike arise.”

—JT Nixon, Director of Parcel Services, LynnCo. 

With our expansive network and access to attractive parcel shipping rates for all modes of transportation, LynnCo can help ensure that your parcel shipments keep moving and that your organization consistently meets SLAs. 

Get in touch with us to get ahead of the competition, and circumnavigate the potential Teamsters strike. We’re ready and willing to help your organization thrive through these unprecedented times.