UPS Begins Preparations for a Freight Strike
I had the following email forwarded to me yesterday from a UPS Freight customer. And I have to say, I can’t believe UPS is doing this! The news starts at paragraph three … UPS Freight will not be picking up freight as the freight contract with the Teamsters gets close to the vote. Essentially, UPS will not be picking up freight starting before the voting period (based on the below schedule) and will not resume operations until the vote has been completed.
This will have the same effect of going on strike. Luckily it's only UPS Freight this time. Here's the email:
Dear (Customer Name):
UPS and the Teamsters Freight National Bargaining Committee concluded the current round of discussions on October 25, 2018. UPS’s offer, which we believe should be ratified, is an offer that rewards our employees with wages and benefits at the top of the industry and compensates them for their contributions to the success of the company.
A union-hall vote, in which Teamster employees will go to their local union hall to cast ballots, is expected to take place November 7-11. At this point, UPS does not have an extension in place to the current UPS Freight contract.
To ensure transparency and not put your volume at risk, starting Thursday, November 1 UPS will not pick up any UPS Freight volume with a delivery date after November 8. The last day UPS will pick up UPS Freight will be Thursday, November 1 for five-day shipping commitments; Friday, November 2 for four-day shipping commitments; Monday, November 5 for three-day shipping commitments; Tuesday, November 6 for two-day shipping commitments; and Wednesday, November 7 for one-day shipping commitments.
If you have a bundled contract, or incentives dependent upon UPS Freight volume, we will ensure you experience no negative financial impact.
The UPS Small Package National Master Agreement (NMA) has been ratified. Customers can remain confident UPS is ready to continue to serve its small package customers throughout the holiday season and beyond.
We appreciate your patience as we work through this negotiation.
What This Means for Retailers
A strike could have a major disruption to retail and e-commerce businesses that rely on UPS Freight. Apart from DC-to-store shipments and some store-to-store loads, the less-than-load (and truckload) carriers transport inbound freight to DCs and warehouses once they clear ports, not to mention larger (non-parcel) deliveries directly to customers.
UPS has now begun discussions with UPS Freight customers to inform them of the potential for service disruption and the need to arrange alternative carriers. Because it cannot guarantee against a work stoppage, UPS can't afford to put its customers’ volume at risk of being stranded in the UPS system. UPS is actively working to empty its network of freight by Fri., Nov. 9. UPS doesn’t want customer inventory custody issues as loads are abandoned throughout the network.
UPS Freight is the fifth largest provider of LTL services with $2.6 billion revenue in 2017. Keep in mind that even with UPS Freight in service, there was already a capacity crunch in the LTL market. Today’s announcement will leave many retailers scrambling to find alternative carriers.
I guess if there’s any good news, it’s that — unlike small parcel, which is dominated by the FedEx and UPS duopoly — there are many LTL alternatives in every region. Shippers that need help transitioning freight away from UPS have several options. They can directly contact other LTL providers or work with 3PLs and freight brokers. If they need referrals, Shipware is happy to help. Email email@example.com.
Related story: Teamsters-UPS Have Tenuous Agreement in Place: What it Means for Retailers
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.