A looming strike at UPS could be “one of the costliest in at least a century,” Reuters reported, citing calculations by think tank Anderson Economic Group. The point of contention in the negotiations is wage increases for part-time employees. According to trade unions, the company needs to make its offer more attractive to employees who risked their lives during the pandemic to help the company generate above-average profits.
Michigan-based Anderson Economic Group (AEG) has calculated that the cost of the United Parcel Service (UPS) labor strikes will include customer losses of $4 billion and loss of direct wages of more than $1 billion.
It was recalled that a 15-day UPS strike in 1997 disrupted the delivery of goods. It cost the world’s largest package delivery company $850 million.
Delays of a million daily parcel deliveries
About 340,000 union-represented UPS handles nearly a quarter of package deliveries in the United States and serves virtually every city in the country. Shipping experts have warned that the strike could delay millions of daily deliveries, including orders from Amazon. They added that it could also re-ignite the supply chain disruptions they are fueling inflation.
Reuters reported that talks between UPS and the International Brotherhood of Teamsters union had stalled. A strike has been announced if the deal is not ratified before the current contract expires at midnight on July 31 this year.
“Customers will feel it within a few days,” AEG CEO Patrick Anderson assessed the potential impact of the strike.
‘Loss analyzes do not include costs related to supply disruptions for, for example, perishable drugs used to treat cancer and other life-threatening diseases,’ he added.
Threat to the American economy
A point of contention in the negotiations is wage increases for part-time workers, who make up about half of UPS’s workforce.
Anderson also noted that this strike would be more of a threat to American economy than the job stoppage of UAW workers at the “Detroit Three” automotive plant, which began contract talks on Thursday. He explained that talks with carmakers involve fewer employees and have limited geographic impact.
UPS urges Teamster to return to negotiating, but union officials say UPS needs to make its offering more attractive to workers who risked their lives during the pandemic to help the company generate above-average profits.
Stifel analyst Bruce Chan said in a statement that UPS faces two unattractive choices: risk a strike and resultant customer losses, or agree to Teamster’s demands that could worsen the company’s unfavorable labor cost situation.
Both situations would be painful for UPS, so it may just be a matter of when and how the company wants to take the cure, Chan commented.
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