Potential UPS Strike May Exacerbate Trucking Supply
The United Parcel Service is one of, if not the, largest carrier(s) in the United States. They are estimated to handle 20 million parcels every day. The International Brotherhood of Teamsters (IBT) union represents 340,000 UPS employees, and the two sides are unable to reach an agreement regarding labor terms. If they cannot reach an agreement soon and the workers go on strike, as 97% of members voted to do, what will the ramifications be?
Backlog
Packages already with UPS will no doubt be stuck in limbo due to a reduction in workers delivering the packages, creating a backlog of parcels to be delivered. Anyone who currently has a parcel in the system might want to keep crossed fingers that the two sides can reach a proper agreement.
New Market Entrants?
The parcel delivery system is not only composed of trucks, but when it comes to hauling lots of packages a long distance, trucking is exactly what UPS uses to get items across the country, or at least about 98% of the distance before being loaded onto a smaller van.
While FedEx, UPS’ main competitor, is expected to absorb a good portion of the demand for a short period, they certainly do not have the capacity to fully manage another 20 million parcels each day. This is a chance for smaller logistical companies to shine.
Smaller companies that deal in parcel delivery may be more willing to contract with trucking companies due to a higher influx of demand for their services when UPS’ business operations become crippled.
Conclusion
This potential for a strike is actually a repeat episode; IBT initiated a fifteen-day strike in 1997 when it represented 185,000 employees. This strike cost UPS approximately $500 million in lost business. With more workers behind them, an indefinite length of time for a strike, and the fact that the dollar is simply not as powerful as it was in 1997, the chances this modern strike would exceed half a billion dollars is extremely high.
UPS’ loss may be the gain of other, smaller businesses as people who need their parcels delivered scramble to find an alternative.
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