UPS, Teamsters Reach Deal to Avert Major Strike

UPDATE Jul 25, 2023 11:22 AM CDT

It looks like there won't be a potentially devastating UPS strike after all. The company and the Teamsters union agreed to a five-year labor contract on Tuesday, reports the Wall Street Journal. The deal includes pay raises for all UPS workers, including part-timers, and the installation of air-conditioning in delivery vans, per the Washington Post. The union represents UPS' approximately 340,000 delivery drivers. The Teamsters' Sean M. O'Brien says the pact "sets a new standard in the labor movement," while UPS chief executive Carol Tome calls it a "win-win-win." UPS members must still vote on the deal.

Jul 7, 2023 2:39 PM CDT

Roughly one-fourth of all packages shipped each day in the US are moved by UPS, by one measure. That's the hole that will be left in the supply chain if a strike shuts the company down, which has businesses nationwide already looking for solutions, the New York Times reports. Often that means turning to FedEx or the Postal Service. Some companies are better prepared than they were years ago, having been forced to diversify their supply chains by the pandemic. Other operators facing another disruption are just weary, especially owners of small businesses.

"Maybe a larger business can withstand those types of situations," said the co-owner of an olive oil company in California. But she and her husband, she said, "don't have a lot of extra time in our day to be on the phone with the post office or FedEx." Many companies developed backup systems over the past few years, not just because of the pandemic but because of tariff battles and a container ship becoming stuck in the Suez Canal—which caused a backup in Los Angeles with sweeping effects. Nordstrom's chief supply chain officer, for example, said the retailer has emphasized moving freight between carriers when needed. "We can do that with a lot more flexibility and speed than we were able to in the past," he said.

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In many cases, turning to FedEx will increase delivery costs. The Harlem Candle Company would have to pay $2 more per candle for shipments in the New York area. "We don't really have a choice right now," the company founder said. Demand for the help of third-party carriers is increasing, some of which have the volume to negotiate better prices for clients with FedEx and the Postal Service. A strike still could be avoided, or a strike could happen but not last long. The latter possibility is still worrisome, a supply chain consultant told CNN. Shipments would stack up quickly on loading docks, so that the effects of a strike lasting a few days could cause backups that will last a while. (More UPS stories.)