UPS contract negotiations are set to start in Washington, DC on April 17. And with discontent among UPS Teamsters at record levels since the start of the pandemic, the threat of an employee strike looms high.
The consequences of a major disruption at UPS—one of the largest shipping carriers in the world—would ripple across national and international supply chains. While UPS has reassured customers they can reach an agreement with workers before their contract expires on July 31, shippers must be proactive and start planning for a possible strike—whether they’re UPS customers or not.
Look for alternatives
Most shippers have diversified their carrier strategies in response to the pandemic’s supply chain disruptions and increased operating costs. However, UPS’s unrivaled size and capacity mean that many firms still rely on it to move a large portion of their parcel volumes.
In some cases, contract agreements may make it difficult for shippers to divert cargo volumes away from UPS. But those with the option should look into reducing their reliance on UPS’s network—at least temporarily—and build a cache of alternatives in case of a disruption. Transportation management systems (TMSs) such as CTSI-Global’s Honeybee™ TMS can help shippers through this process by giving them access to thousands of pre-vetted carriers. With a selection of quality partners, shippers have significant flexibility if UPS carriers fall through.
Plan for delays
A sudden surge in demand for shipping services from UPS customers seeking alternatives will likely overwhelm other carriers, leading to operational delays and affecting their existing customers. UPS’s size and market share mean that a strike could severely constrain market capacity and lead to significant disruptions throughout supply chains. Shippers that depend on UPS to transport critical inventory or that run on just-in-time systems are particularly at risk of inventory shortages and disruptions.
Prepare for increased costs
As firms seek alternative carriers to fulfill transportation needs, there’s a risk these carriers will increase their rates to meet growing demand and make up for greater operating costs. While rate hikes are unwelcome for any firm, small shippers are especially vulnerable, as they may not have the resources to absorb higher shipping expenses and weather capacity constraints. Similarly, increased costs at UPS resulting from higher operating costs or attempts to make up for lost revenue could affect pricing terms for existing customers, leaving them with higher rates than initially negotiated.
Review existing contracts
Whether suspensions due to force majeure or even rate increases, a strike or a new contract at UPS could alter the company’s obligations and rights under existing agreements, as well as those of their customers. Shippers working with UPS should review existing contracts to determine whether any clauses could be affected by the negotiations or whether any provisions address the possibility of a strike or similar disruption.
Manage customer expectations
Shippers should proactively communicate with their customers about any delays or disruptions that may occur in the event of a UPS strike. Demonstrating transparency and responsiveness will go a long way toward building up customer trust—helping to shape customer expectations and reducing the likelihood of negative feedback.
Protect your supply chain from UPS strikes and every disruption with CTSI-Global
CTSI-Global’s suite of supply chain tools helps firms optimize and proactively protect their supply chains from disruption. Our Parcel Management and Honeybee™ TMS tools put a wide network of trusted carriers at shippers’ fingertips—so firms can diversify their carrier networks quickly and easily with trusted partners.
To learn how CTSI-Global can support you through this and every challenge, contact our team of logistics experts.
