Home Commentary Avoiding the costliest strike in U.S. history

Avoiding the costliest strike in U.S. history

By

Jason Miller

-

08/04/2023

The International Brotherhood of Teamsters union and UPS have agreed on a new five-year contract that boosts wages and guarantees more air conditioning in drivers’ trucks. The tentative deal, struck on July 25, came one week before an Aug. 1 deadline that the Teamsters had set for a threatened strike. What does this deal say

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The International Brotherhood of Teamsters union and UPS have agreed on a new five-year contract that boosts wages and guarantees more air conditioning in drivers’ trucks. The tentative deal, struck on July 25, came one week before an Aug. 1 deadline that the Teamsters had set for a threatened strike. What does this deal say about the supply chain and labor? This reinforces the strong bargaining position of unions representing workers in the logistics sector – not just in the U.S. but also in Canada, Europe and elsewhere. My view is that UPS was more willing to accept the Teamsters’ demands because current economic conditions favor labor. In addition, the company realized that a strike could have cost it substantial market share, up to 30% of volume by one estimate. Combined with the company’s recent high profits, it was not in UPS management’s interest to let a strike proceed. Roughly 57.3% of the packages UPS delivers are shipped straight to consumers. The rest of the deliveries go to retailers and other businesses. Based on my years of researching transportation operations and supply chain disruptions, the impact of a UPS strike would have stretched far beyond delayed delivery of everything from pet food to tennis rackets that U.S. consumers buy online. A UPS strike could have disrupted the availability of spare parts for cars and wholesale medical supplies, just to name a few essentials. Consumers would also have found it harder to get clothing and shoes in stores, as retail locations are typically replenished by parcel carriers. Even a 10-day strike could have cost the U.S. economy an estimated $7.1 billion, according to research firm Anderson Economic Group. That would have made it potentially the costliest strike in U.S. history. The tentative agreement now must be ratified by Teamsters employed by UPS. Voting is expected to conclude on Aug. 22. My expectation is that the union’s rank-and-file members will approve this contract. Jason Miller is an associate professor of supply chain management at Michigan State University. Distributed by The Associated Press.