In anticipation of a Teamsters union strike, the fifth-largest LTL carrier in the U.S., UPS Freight, has started to empty its network of freight and is refusing inbound shipments with delivery dates after November 8, 2018, reports William B. Cassidy of the Journal of Commerce. The rush to empty comes just weeks away from the holiday shopping season. The actions taken by UPS will place a considerable burden on LTL shippers, and it is essential to understand what this move means for the shipper that routinely uses UPS Freight.
What Happened With UPS Freight and the Teamsters Union?
Approximately 60 percent of eligible union UPS Freight workers refuted the proposed contract in October. UPS made a final offer on October 25, but a vote for that offer has yet to take place. UPS Ground, providing parcel service, settled its contract with the Teamsters in October.
The ratification of the proposed contract sped along with fewer than 50 percent of eligible voters in attendance, making passage easier. Unfortunately, the same factors did not occur as part of the UPS Freight-Teamsters negotiations.
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The original contract proposal, which Teamsters recommended for approval, was voted down in October. Eligible voters will begin the voting process for the final proposal on November 7. Unfortunately, the threat of lost operability exists, so UPS has taken steps to prepare for a possible “no” vote to arise.
What’s Happening With UPS Freight Between Now and November 7?
UPS Freight understands the risk of not providing the best service to customers is great. That’s why UPS has created a schedule to give shippers an opportunity to find other carriers. In a statement, UPS said, “We cannot afford to put our customers’ volume at risk of being stranded in our system. Therefore, we will work to empty our network of freight by Friday, Nov. 9.”
The preliminary schedule to achieving the empty UPS Freight network by November 9, based on pickup dates, is as follows:
- Friday, November 2 for four-day shipments
- Monday, November 5 for three-day shipments
- Tuesday, November 6 for two-day shipments.
- Wednesday, November 7 for one-day shipments.
This schedule will also give third-party logistics providers, freight forwarders and freight brokers the time necessary to adjust their systems to ensure undisrupted service to shippers.
When Will UPS Freight Union Members Go on Strike?
This depends on the potential ratification of the final proposal. A 30-day contract extension for UPS Freight expires Monday, November 12. On October 25, the UPS Freight National Negotiating Commitment notified members of a strike to take place with times and locations to come if the extension expires without ratification of the final proposal.
What Are UPS Workers’ Top Demands?
Understanding a strike requires knowledge of what eligible workers expect from a successful, fair contract. According to TTU News, the Teamsters union sought restrictions on subcontracting and pay protections for drivers performing dock work. In response, UPS offered a contract, citing pay at the forefront of the industry.
Regardless of pay offered in the proposal, the amount of work that can be subcontracted to other freight haulers is the primary obstacle to ratification. UPS Freight offers to reduce subcontracted work by 4 percent over a five-year period. Nicolas Mayo, driver and member of Teamsters Local 25 for Boston cites additional problems beyond subcontracted word and still acknowledging the role of subcontracting in determining the electoral outcome.
What Does a Potential Strike and Lost Access to UPS Freight Mean to Shippers?
UPS Freight makes up 6.9 percent of the LTL market. FedEx holds the top-tier market share with 16.8 percent. The market can quickly absorb the temporarily lost access to UPS Freight, explained Thomas Anderson of LJM Group, as reported by Mike O’Brien of MultiChannel Merchant. Since UPS Ground’s contract was ratified, FedEx faces no new pressure to scramble in securing available capacity in its parcel network.
There is an argument that UPS Freight may be the least profitable division of UPS, said Satish Jindel of Shipmatrix, as noted by O’Brien. The concession to shut down UPS Freight in the event of a strike seems to confirm that suspicion.
Following the last major LTL strike in 1994, as well as the most robust demand for LTL freight since 2004, UPS Freight has managed to meet capacity demand and offer competitive rates.
Shippers that must go to other carriers may see an increase in LTL shipping costs, but the goal is to prevent disruptions to customers. At the same time, UPS as a whole will not strip volume discounts from shippers that would have previously seen lower rates for parcels or other services due to the use of UPS Freight.
What Does It Mean for Cerasis Shippers?
Shippers can still use UPS for parcels through Cerasis, but UPS Freight has been removed from the Cerasis Rater temporarily. This is an effort to ensure continuity of service and access to other available LTL carriers. Cerasis is committed to preventing adverse financial impacts from the shutdown of UPS Freight for our partners. More importantly, we advise all shippers that leverage UPS Freight outside of the Rater or through other business ventures to consider the potential impact the strike may have and be mindful of the preliminary pickup schedule to ensure an empty UPS Freight network by November 9.