Insight: UPS Air Maintenance Workers Vote to Strike
After three years of negotiations, UPS air maintenance workers just voted to authorize a labor union strike. Like many Americans, the workers share concerns over rising healthcare costs. The union claims that the current contract fails to address those costs and that it exposes workers to great health risks implicit in working around jet engines. Regardless of reasoning, the vote indicates that workers are prepared for a UPS strike.
How Will it Impact Holiday Shipping?
The air maintenance workers are under the U.S. Railway Labor Act, meaning they are only allowed to strike after mediation and negotiations have failed. According to official reports, the process involves a 30-day cooling-off period followed by a ruling from a board appointed by the President—a process which takes another 30 days. At 60 days out, a strike is unlikely to impact holiday shipping.
However, that does not mean shippers will be entirely shielded from effects until that time. According to the Teamsters’ official press release, mechanics have already picketed outside a major Amazon distribution center to show UPS executives and their partners that they mean business. In addition, the release states that “Protests and informational pickets will continue throughout the holiday season at locations across the country.” Expect such demonstrations to continue.
While the potential labor strike would not occur until the first quarter of the new year, a labor stoppage by air maintenance workers could have several effects. It might cause reduced shipping bandwidth, increased shipping times, or a complete halt of UPS’ global shipping operations for the first time since 1997. While not common, UPS strikes have previously disrupted the small parcel market, allowing FedEx and RPS (later acquired by FedEx) to step into national prominence.
According to iDrive EVP Glenn Gooding, the current labor dispute may be just the tip of the iceberg. “The strike threat is a warning flare for future negotiations,” he explained. “The Teamsters Union contract is up for renewal in July 2018, and if the maintenance dispute doesn’t resolve smoothly it could mean disaster for UPS—and its shippers.” In Gooding’s eyes, there is no reason to be alarmed at this point, but there is enough reason to be prepared for what may be coming.
Steps You Can Take to Prepare
1. Consider Dual-Sourcing Now
The first step your business can take now to prepare for the possibility of future labor strikes is to consider dual-sourcing your shipping. That means that if you currently have an agreement with only UPS, it is time to look at moving inventory through FedEx, UPS, or another carrier. Dual-sourcing can be tricky, however. You must be aware of the nuances of your UPS agreement so that you do not risk falling short of your performance language.
There is some urgency to beginning this process because competing carriers will prioritize existing clients over newcomers in the event of a UPS strike. By getting your foot in the door now, you can begin to build a relationship that may save your customers at a future date. If you have questions, contact our shipping experts here.
2. Renegotiate Your Contract with Caution
Is your UPS contract up for renewal before July 2018? If so, do not sign anything until you have considered the July 2018 Teamsters negotiation. What happens to you, the customer, in the off-chance there is a strike? What kind of guarantees, refunds, or contingency plans will they offer to retain your business? These are just a few examples of the high-level questions that must be addressed if you want to protect your customers from a disruption in service.
We’ll keep you informed of progress with the negotiation and how it might impact your business.
RESOURCES FOR SMALL PARCEL MANAGEMENT:
- Carrier Agreements: How to Negotiate a Better Deal – Click Here
- Carrier Agreements: Understanding the Fine Print – Click Here
- Ship Storm 2017: How to Navigate the Small Parcel Waters – Click Here
White Paper: Learn how cost modeling enhances shipping contract negotiation.
LinkedIn Group: Follow iDrive’s partner Linkedin Group, “E-Commerce Supply Chain Forum,” for commentary, articles and engaging discussion.