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.
Rob Allen
O’Brien is claiming credit for increases already granted by Brown. Driver wages are at all time highs following COVID.
The only real “injustice” affects the Part Timers. That said , I worked as a part timer for 15 years and UPS/Teamsters provided a decent (not great) program since they covered 100% of Health Care.
My brother Teamsters need to step carefully,,,,,,,,,, as this Strike will make many shippers step back from UPS and may cost market share that reduces the number of hours available to Part Timers and push drivers back into Pre Load and Twilight shifts.
Last but most importantly…..this job action may also save Non Union Carriers e.g. FedEx Ground (they are dying) and feed more revenue to Amazon
Think about it………………
Trucker chuck
Ups management is not used to any one telling them no !! The current teamster brass has told them just that ! Diversion of packages will occur but fedex and usps won’t be able to handle the volume and when the dust settles the ups customers will return. The national right to work foundation, is aka the national right to work for less foundation ! There is strength in numbers union shop states have better wages and benefits due to a strong union participation.
Tacitus
Even Putin didn’t get 97% of the vote
Ron Kaminkow
Freightwaves just gave this scab union-busting outfit a lot of free airplay. Perhaps Freightwaves could now see fit to give the union and the hard working UPS employees the chance to state their case. Ron Kaminkow, Organizer, Railroad Workers United
Christina Fernandes
If YRC runs out of cash & UPS goes on strike, how are we feeling about the level of potential disruption this may have? this smells like volatility. #tipofthescale
Tacitus
UPS failed over 20 years ago when it thought its biggest competitor was the Post Office and not the internet. UPS failure to deliver Amazon packages enabled Amazon to gain a foothold in the industry. UPS will lose more than 30% volume. All this because UPS refused to invest in infrastructure, quality leadership, and technology that is used only for discipline purposes.
Ha
Jindel said that the contract would be done in june. He also said there was no companies with the last strike in 97 that could deliver, yeah there was, you had DHL, Airborne Express, USPS, Speedway delivery, RPS which is now Fedex Ground. The last strike in 97. UPS was a private company with no shareholders now they are public. UPS is more then a delivery company also, they own tech companies, real estate, financial banks. Ups on time delivery rate 97%, Fedex is 88%. Fedex can barely handle the volume they have adding another 24 million pacakges to there system would overload an already weak system at Fedex especially with them downsizing and closing centers for cost savings.
Don
The only honest Teamster leader was Ron Carey and that is so for today also. Why UPS allowes O’Brien to capture the airwaves with his misinformation and does not respond is beyond me. He neglects to mention that 59% of the people he claims to represent own stock and were part of the Covid 100 billion dollar profit UPS made the last few years. UPS pays for College Tutition along with health and welfare costs for all employees. No mention of that. He runs his mouth to prove to himself that he is qualified for the job he has. We know differently though.