After months of harsh words and faltering negotiations, the 350,000 Teamsters at UPS appear ready to strike. While a strike at UPS is sure to have an immense impact on the global transportation industry, the ongoing dispute between UPS CEO Carol Tomé and Teamsters General President Sean 0’Brien isn’t the only must-know headline from the last week: Yellow Corp. is in the red as falling volumes and labor issues stress finances, and the latest U.S. transborder numbers reveal a grim picture for North American freight.
With transportation professionals industry-wide on the edge of their seats, it’s more important than ever to keep up with the latest happenings in logistics. Here's what you need to know in an industry that’s always moving.
After months of tense negotiations, the struggle between UPS and the International Brotherhood of Teamsters is coming to a head. Following a June 28 Teamsters walkout from contract negotiations in Washington, D.C., the Teamsters released a statement titled “Nationwide UPS Strike is Imminent,” in which Sean O’Brien had strong words for UPS leadership:
“The largest single-employer strike in American history now appears inevitable [...] Executives at UPS, some of whom get tens of millions of dollars a year, do not care about the hundreds of thousands of American workers who make this company run. They don’t care about our members’ families. UPS doesn’t want to pay up. Their actions and insults at the bargaining table have proven they are just another corporation that wants to keep all the money at the top. Working people who bust their asses every single day do not matter, not to UPS.”
In a blow to UPS’s hopes of a quick and timely resolution to ongoing contract negotiations, the Teamsters rejected the parcel giant's first economic counterproposal.
Per a FreightWaves article, union leadership called the response “disrespectful” because it included minimal raises and overall wage cuts to workers’ cost-of-living adjustments. “We are not accepting whatever crumbs these executives might throw our way. UPS has made plenty of money,” Teamsters General Secretary Fred Zuckerman said. “Our members have sacrificed everything to make them rich. We are demanding a real offer right now.”
The Teamsters’ initial proposal included pension increases, increased paid time off, additional holidays, and an end to UPS’s two-tier wage system, under which part-time and full-time employees saw significant differences in hourly earnings.
As negotiations with the Teamsters fail to lead to a resolution, LTL carrier Yellow Corp. is being forced to make drastic decisions to remain solvent. In a letter obtained by FreightWaves, Yellow CFO Dan Olivier said the company is requesting to defer welfare, health, and pension contributions in July and August. While this request reveals the extreme nature of Yellow’s position, the company maintained that these deferments would not take a toll on employee benefits.
As the federal government continues to work to bolster supply chains in the wake of the COVID-19 pandemic, the Commerce Department is ramping up its investment in domestic transportation. Under the directive of the Biden administration, the Commerce Department will funnel more than $20M through the Hollings Manufacturing Extension Partnership (MEP) to establish a national network of supply chain companies known as the Supply Chain Optimization and Intelligence Network (SCOIN). With this network, the commerce department hopes to improve resilience in domestic supply chains through increased collaboration.
“For the first time, the U.S. government is creating a comprehensive end-to-end mapping of the supply chain, which is crucial for the domestic manufacturing industry and resiliency,” Pravina Raghavan, NIST MEP director, said in a June 9 statement released by the National Institute of Standards and Technology. “Supply chain shortages are due to a lack of supply chain capacity. To address this issue, we’re creating an information system that lays out all the suppliers across various industries. This way, we can connect small suppliers to more opportunities in the supply chain.”
FedEx will close facilities in 15 states, ending FedEx services in largely rural areas in the West, Mid-West, and South-Central U.S. markets. The closures come as FedEx, like many other transportation providers, struggles to contend with historically low freight volumes.
As Target works to compete with last-mile delivery giants like Amazon amid rising customer expectations, the retail giant is testing a new strategy to bolster e-commerce services for customers away from urban centers. The company is testing an extension facility in Smyrna, Ga., to expedite next-day delivery services to suburban customers. Through Shipt, a Target-owned last-mile delivery provider, the packages are brought from the extension distribution center to customers' doorsteps.
While Target did not reveal the cost of the Smyrna extension facility, located some 30 miles north of Atlanta, a Target spokesperson told CNBC that the cost of the extension facility would be pulled from the $100M allocated by Target to bolster supply chain operations amid declining e-commerce sales.
The latest numbers from the Bureau of Transportation Statistics reveal that transborder freight from Mexico and Canada is down significantly year-over-year. Key metrics, such as total freight, reveal steep drops.
By transportation mode, trucking saw a slight increase of 2.0% YoY, while rail and air saw significant decreases of 8.4% and 4.1% YoY respectively.
While inflation remains high in many economic sectors, the food sector has seen some relief in recent months. As a result, volumes for refrigerated trucking companies have decreased, with FreightWaves’ Reefer Outbound Tender Reject Index revealing that fleets are rejecting roughly 4.7% of reefer loads, down from 8% in 2022 and 34.9% in 2021.
Despite these low volumes, some experts point to grocery retailers' investment in private-label brands as a reason truck volumes have remained higher than expected. According to FreightWaves, dollars spent on private-label brands increased by 10.3% in the first three months of 2023.
Per The Drive, a significant train car shortage plaguing U.S. railroads is the latest hurdle for the American automotive industry. The shortage has left roughly 70,000 cars sitting at distribution centers. While the railcar shortage is currently impacting the automotive industry, the effects could quickly spread to other sectors, including food and manufacturing.
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