UPS Inc. should be prepared to lose as much as 30% of diverted volume should the Teamsters strike the company by the end of the month and a work stoppage last for a decent duration, a leading parcel consultant said Monday.
UPS handled about 18.6 million parcels in the U.S. per day in the first quarter. Under a contingency plan, it expects to handle 4 million parcels on its own. The balance of about 14.6 million parcels, most of which would be ground deliveries, would be subject to diversion.
Satish Jindel, president of consultancy ShipMatrix, said in a communique to FreightWaves that the 30% of volume that could be lost would be equivalent to more than 4 million parcels a day.
Because there are about 80,000 package car drivers and each driver delivers about 230 parcels per day, the diverted volume, if it never returns to UPS (NYSE: UPS), could result in 4,300 lost driver jobs and those of a few thousand package handlers for every 1 million packages diverted, he said.
Unlike the last Teamster strike in 1997, there is plenty of competition for diverted volume. For example, FedEx Corp., (NYSE: FDX) whose ground unit didn’t exist back then, is delivering on-time performance for air and ground on par with UPS, according to Jindel. This will give shippers more confidence to keep diverted volumes with FedEx, he said.
On Sunday, the U.S. Postal Service launched “Ground Advantage” with two-to-five-day transit times comparable to FedEx and UPS. Jindel envisioned a scenario in which large shippers divert lightweight parcels under 5 pounds that can fit in a mailbox to the Postal Service and the heavier parcels to FedEx.
The potential damage to UPS and its unionized workers behooves both sides to return to the table and resume negotiations, Jindel said. Talks collapsed last week reportedly over an inability to come to terms on part-time wages. No new talks are scheduled. The current contract expires July 31.
“Being very tough in negotiations is analogous to stretching a rubber band,” Jindel wrote. “No one knows the full limit before it snaps and then one has to start all over again with a new set of conditions.”
Separately, for the minority of Teamsters union members at UPS who don’t favor a strike should a contract not be agreed to in three weeks, the National Right to Work Legal Defense Foundation on Monday issued some advice.
All UPS employees can resign their membership in the union and continue to do their jobs, according to a legal notice issued by the foundation. “If you don’t support the union you can send the union a letter resigning your membership at any time,” the notice said.
In addition, employees who resign their membership — or who are already nonmembers — have the right to work even if the union orders a strike. “Union officials can — and often do — fine union members thousands of dollars for working during a strike,” the notice said. “So you should seriously consider resigning your union membership before you return to work during a strike, which is the only way to avoid fines and discipline.”
Employees working in a “right-to-work” state, where union membership and financial support are voluntary, can resign their membership and opt out of all union financial support, according to the notice.
Employees not working in a state with those protections have the right to opt out of paying dues for union politics and may be able to avoid other union financial support, according to the notice. In non-right-to-work states, unions can still only mandate that employees pay dues as a condition of employment if the union and management have finalized a union monopoly bargaining contract that contains a valid forced-dues clause, the notice said.
About 97% of UPS’ members have voted to authorize a strike if a contract is not reached by July 31. The Teamsters represent 340,000 UPS employees, many of them part-timers.
George
There is a reason why UPS handles 6% of the nation’s GDP and the competition does NOT… not even close. It’s because no one can run their operation as efficiently and cost-effectively as Big Brown and it’s mostly Teamster employees making it happen. I’m sure I’m the event of a strike some volume will divert to other modes. It did in ‘97 during the two week strike that occurred then. FedEx Ground got a shot in the arm, no argument. But a lot of that business did eventually come back to UPS and the company is much larger now than it was back then, with more employees handling much more volume than in ‘97. No one really wants a strike but UPS would rather push things that direction to save face, even if it means disruptions to their customer base, in order to not be seen as capitulating to Sean O’Brien, the militant new general president of the International Brotherhood of Teamsters. He warned UPS over a year ago about the dangers of playing chicken with the union and apparently Carol Tormé, CEO of UPS, thought he was all bark and no bite.
She is about to find out how expensive of a gamble that was…
Gary Canonica
I was a Teamster and local 85 San Francisco for 39 years. If it wasn’t for the teamsters health and welfare plan plus the pension I don’t know if I could have made my retirement.
Jim
Sure, leave the Teamsters and be a scab worker, terrible advice from someone who obviously has no clue how the union works!!!
Been there and escaped
No one knows how hard the Driver job is (unless you have done it, I have). Similarly, teamster drivers have NO idea about market dynamics, they just parrot union talking points. Customers have been fed up with UPS since heavy handed COVID pricing tactics. This coupled with PLENTY of market capacity means the low end of the seniority scale needs to go look for work. He said 4k…. More like 10k. Good luck finding a comparable job. It’s called cutting your nose off despite your face.
Robert
Ha, don’t forget eastern connection, pony express couriers, parceltek, film transit, lone star overnight, Dunham express, western parcel express, and the tex pack family of companies. The other poster is right about feg not being able to absorb any more packages into its network should ups strike.