The world of logistics and transportation finds itself at a critical juncture as the United Parcel Service (UPS), one of the industry’s most significant players, faces a potential workforce strike commencing as early as August 1st. An overwhelming 97% of UPS union workers, representing roughly 340,000 individuals, have voted in favor of the proposed strike.
As the clock ticks down to July 31st, both parties have a shrinking window to resolve their differences. Failure to reach an agreement means that UPS employees will commence their strike the following day. Although the Teamsters union continues to express its openness to further negotiations, UPS has already begun making preparations, training non-union employees to step in if the strike proceeds.
The Ripple Effects on the Last Mile
The most immediate and impactful consequence of this strike will be felt within the last mile market. Consumers are likely to face slower and delayed deliveries, with the possibility of package losses heightened amidst the disruption. Brick-and-mortar retail, too, won’t escape unscathed. Companies can expect inventory shortages as the strike impacts the speed and efficiency of replenishment.
In 2022, UPS commanded an impressive 35% market share among last mile carriers, outpacing other major industry competitors. This trend seems poised to continue into 2023. Several leading retailers—Amazon, Apple, eBay, Etsy, Walmart, Samsung, Best Buy, and Costco, to name a few—rely heavily on UPS for their last mile supply chain operations. A strike by UPS employees presents a potential significant interruption for these retail leaders.
project44 data in the graphic below shows a trend towards carrier diversification, indicating that shippers are proactively expanding their networks in anticipation of possible disruptions. While stability has thus far been maintained, a strike from UPS would undeniably upset this equilibrium.
A Shifting Last Mile Landscape
At project44, we’re keeping a close eye on these unfolding developments and are committed to providing regular updates. Should the strike occur, we anticipate significant fallout, including a decrease in on-time performance and extended lead times. It’s expected that carriers may impose restrictions on the volume they can accept from transitioning UPS customers, even possibly limiting their existing customers’ daily volume.
Over the last several years, project44 has observed a steady increase in carrier diversification among retailers. This has enabled them to build relationships with alternative service providers, providing some resilience against such disruptions. Nevertheless, it’s doubtful these alternatives will fully absorb UPS’s significant volume, leaving a gap in the market.
While the strike’s implications are undoubtedly far-reaching and complex, we’re committed to helping you navigate this changing landscape. Stay tuned for updates as we monitor this developing situation with UPS and its potential impact on last mile delivery.
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