The impending UPS strike prompts some companies to rethink supply chains

The impending UPS strike prompts some companies to rethink supply chains

Catherine Keeler and her husband, Stuart de Hauff, own an olive oil company in the hills of central California. The couple spends their days harvesting olives, bottling the oil, labeling and shipping out glass bottles, relying mainly on UPS to get their product to kitchens across the United States.

They are far from alone. UPS handles about a quarter of the packages shipped daily in the United States, according to pitney bowes parcel shipping index, many of them for small businesses like Ms. Keeler’s company. Rancho Azul y Oro.

But with labor contracts between UPS and its 325,000 employees expiring at the end of the month and fears of a possible strike, business owners across the country are facing the latest in a series of supply chain disruptions they have faced since the beginning. Only done. of the epidemic.

Some are already turning to FedEx or the US Postal Service, the next largest private carrier in the United States, which typically handles lighter packages. Others are calling on their third-party shippers — companies that work with companies like UPS, FedEx and DHL to handle their customers’ shipping needs — to make sure their packages make it to their destination even when the strike occurs. to reach the final destination.

The logistical challenge is another burden on businesses that have shrunk over the years.

Ms. Keeler said, “Probably a large business can handle these kinds of situations.” But as small-business owners, she and her husband “don’t have a lot of extra time in our day to talk on the phone with the post office or FedEx.”

Since 2020, the pandemic has affected the global supply chain in multiple ways. E-commerce hit record levels as Americans stuck at home bought clothes, furniture, workout equipment and groceries online. Companies had to deal with Covid-related shutdowns at factories in China and Vietnam. There were delays around the world when a large container ship got stuck in the Suez Canal, causing a pile-up of containers at the port of Los Angeles. Those conditions affected the way goods arrived in the United States.

The UPS strike could affect the way brands move their goods domestically.

“It is something that affects us on our home ground and how do we solve it?” said Ron Robinson, chief executive of Beautystat, which uses UPS to ship its skin care products to retailers like Ulta and Macy’s.

One strategy his team will rely on, he said, is to try to bundle packages, sending as many at a time as possible.

Switching to another carrier is going to be costly for some companies.

Ryan Culver, chief executive of monthly charcuterie board subscription service Platterful, also uses UPS. Switching to FedEx Express — necessary to ensure that meat in its packages reaches consumers on time — would cost about $5 to $10 more per delivery.

Terry Johnson, founder of the Harlem Candle Company, received an email on June 26 from his third-party shipper about a possible UPS strike. It suggested him to switch to FedEx. This would cost him about an extra $2 for each candle shipped to the New York area. It would cost even more to ship his candles to California.

“We don’t really have a choice right now,” Ms Johnson said.

FedEx said it is accepting additional volume for a limited time and will assess how much capacity its network can accommodate. “Shippers who are considering moving volume to FedEx, or are currently in discussions with the company to open a new account, should begin shipping with FedEx,” the company said in a post on its website on Thursday. are encouraged to do.”

The USPS did not immediately respond to a request for comment on how the potential UPS strike is being planned.

Large companies are relying on sophisticated backup plans that have been tested over the years. The pandemic and past tariff trade wars have prompted many major retailers with extensive global supply chains to diversify by the countries they have sellers in and the parcel carriers they use.

“We are focused on investing in a number of transportation solutions that allow us to more efficiently move freight between carriers,” said Alexis Depri, Nordstrom’s chief supply chain officer. “We can do this with far more flexibility and speed than ever before.”

Some third-party carriers are seeing an increase in their businesses as the possibility of a UPS strike has come to the attention of their customers. Stord, an Atlanta-based third-party carrier whose customers include apparel manufacturers and consumer-package companies, is sending emails to its customers not to worry. Stored uses a cloud-based platform to provide services such as warehousing and fulfillment and handles thousands of their packages a day.

By combining the volume of its broad portfolio of customer brands and using software to drive decision making, Stored has the advantage of better negotiating prices with the larger parcel carriers, said Sean Henry, the company’s chief executive.

“We are in talks with FedEx and USPS about rates around UPS so that our customers don’t have to do that,” he added.

Stord said most of his customers had asked him to negotiate with carriers on their behalf. He said this equates to “millions of dollars in annual revenue” for his business.

Still, some business owners aren’t letting the prospect of a UPS strike get the better of them just yet.

Bill McHenry, president of Widgetier, which sells cookware to large retailers, said he felt “kind of numb” after dealing with challenges related to the pandemic. “I’ve seen a lot of things and stories that I’ve heard and things that we’ve had to go through and survive — not just the pricing but the turmoil of thinking you have a container but don’t,” he said. They said. ,

He said the possible rail strike in December is a matter of great concern for him.

Meanwhile, there is a possibility that a settlement could be reached between UPS and the union that represents its workers, the International Brotherhood of Teamsters. The union announced Wednesday that talks had broken down, having previously said the two sides had reached a tentative agreement. If no agreement is reached, there could be a strike as early as August 1.

If that happens, “we will have additional damage,” Ms Keeler said.

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