UPS Workers Threaten to Walk Away from Existing Contract

Recently, we reported on the dramatic developments relating to the UPS/Teamsters contract negotiations. While a tentative agreement was made between the Teamsters leadership and UPS management, the agreement was effectively voted down by the rank and file membership. As a result, the existing contract between the Teamsters and UPS workers was extended until a new agreement could be reached.

A New Wrinkle

As if things weren't dramatic enough, a new and unusual turn - the rank and file UPS workers are now threatening to walk away once their 30-day extension of the existing contract expires on November 12th.

Leverage or Real-Risk to Shippers?

Given the discontent within the Teamsters membership, it's not a completely shocking development that they are threatening to walk away. However, the question here is whether this threat is merely a play for leverage in negotiations or a real possibility. The potential negative outcome of a walk-off could be devastating for shippers. We are quickly approaching a huge holiday shopping season (some say that it's already upon us), if UPS's fleet is taken offline, shippers would end up being in a terrible bind. There are 2 potential negative outcomes if UPS workers walk off the job during peak shipping season:

1. Even Higher Costs

We're already in the midst of an unprecedented rise in shipping costs. While there are many reasons for this rise, including increasing fuel costs, greater reliance on carriers to deliver goods ordered online certainly plays a huge part. If you take UPS's fleet offline, that puts even more pressure on other carriers such a FedEx and USPS. It's possible that that might force carriers to increase costs, at the worse possible time for shippers.

2. Late Deliveries

More likely, however, is that the carriers will be so overloaded that packages meant to arrive at their destination in time for the holidays will end up being late. Late package deliveries were already an issue during previous holiday seasons, without the loss of UPS's fleet. If they go on strike, as they are threatening to do, the issue will be compounded.