UPS impasse with union could deliver a costly strike, disrupting brick-and-mortar businesses as well as e-commerce
Talks between the International Brotherhood of Teamsters and UPS over a new contract fell apart on July 5, 2023.
- Talks between the International Brotherhood of Teamsters and UPS over a new contract fell apart on July 5, 2023.
- Without a deal in place, more than 300,000 Teamsters will stop working on Aug. 1.
What are the reasons for this impending strike?
- The Teamsters dispute UPS’s claim that part-time workers earn an average of $20 per hour.
- The company nearly tripled its net income from the levels seen in 2018 and 2019 of $4.8 billion and $4.4 billion.
- The Teamsters argue that these record profits mean UPS can afford to pay higher wages.
Before the talks collapsed, both sides had been negotiating extensively on a new five-year agreement that would cover about 340,000 unionized UPS workers. The delivery company has agreed to some of the Teamsters’ demands, pledging to:
What should consumers expect?
- If unionized UPS workers do go on strike, many U.S. consumers will surely fear delays in the delivery of their online purchases.
- In my view, that’s a reasonable concern, given that UPS handles roughly 25% of all U.S. package deliveries.
- The 1997 strike, which lasted 16 days, took place when e-commerce was in its infancy.
- Today, consumers spend about 15% of their shopping dollars on e-commerce purchases.
What about businesses?
- A UPS strike could disrupt the availability of spare parts for cars and wholesale medical supplies, just to name a few essentials.
- Consumers will also find it harder to get clothing and shoes in stores, as retail locations are typically replenished by parcel carriers.
- These costs stem from the 340,000 striking workers losing an estimated $1.1 billion in wages and UPS losing $816 million in earnings.
- The balance of this estimate would result from the disruptions incurred by UPS customers.
What do you think will happen?
- On that occasion, Congress had the option of intervening, but a deal was reached before the government had to step in.
- However, it seems likely that there will be calls for the White House to get both parties back to the negotiating table.