The effect of inflation, rising fuel costs, and the slowing of e-commerce on the shipping industry over the past year left the major carriers scrambling to cut costs without losing customers. But those challenges were caused by outside factors. Now, trouble’s brewing inside UPS, and FedEx made it clear to UPS customers that they’re ready to pick up the pieces.
With its current national union contract set to expire on July 31, 2023, UPS and the Teamsters union will begin negotiations in April. Founded in 1903, Teamsters is America’s largest union, representing over 340,000 UPS employees. For reference, UPS employed a total of 536,000 people in 2022.
The Teamsters published a video stating their demands for the new contract:
UPS seems optimistic that they’ll come to an agreement. In the fourth-quarter earnings call, UPS CEO Carol Tomé addressed the upcoming labor negotiations, saying, “we are well prepared for negotiations and are focused on achieving an agreement that is a win for our employees, a win for the Teamsters and a win for UPS and our customers. We have great jobs with industry-leading pay and benefits.” Lest you think the company is operating solely on optimism, in a June 2022 earnings call, she mentioned “building contingency plans.”
The United Parcel Service strike of 1997, also led by Teamsters, involved 185,000 UPS employees. The strike cost UPS over $600 million and shut the carrier’s operations down for 16 days. The strike ended with a new contract that guaranteed increased wages, better job security, and secured benefits.
It’s no secret that FedEx has experienced its share of challenges recently. Now, they have the upper hand.
How has FedEx responded to the news of a possible strike? With a deadline: “Switch your UPS shipments to FedEx before March 31, 2023 to ensure your volume is prioritized.” The scare tactic urges UPS customers to switch to FedEx, where they’ll get priority treatment— whether or not the strike goes ahead.
CNN reported that UPS moves 21.5 million US packages daily, and around 6% of the nation’s gross domestic product every year. A UPS strike is a big deal.
Each carrier wants your business— UPS promises it will take care of its customers and FedEx promises to prioritize volumes for UPS shippers who switch before March 31.
Switching may be the right call— but don’t do it alone. The team at ShipRx can help you with your FedEx or UPS contract negotiation. We are experts in negotiating, structuring, and continually evaluating your contract to lower your shipping cost by 20-30% or more. We’ll help you navigate the looming strike to make choices that are financially beneficial to you— not the carriers.
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