Strike Could Cost UPS 30% Of Diverted Volume

By Mark Solomon of FreightWaves

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 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 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.