UPDATE: According to Reuters, “On August 22, U.S. workers at United Parcel Service ratified a new five-year contract, the Teamsters union said on Tuesday, closing the door on a potential strike that could have put timely Christmas deliveries in doubt and sent shipping costs soaring.” While this incident may have come to a close, these issues will continue to arise. Here’s what you need to know about this near miss and potential shipping instability in the future.
On June 25, UPS and the International Brotherhood of Teamsters reached a landmark deal that averted what could have been the most expensive strike in US history.
For many retailers, this news brought a welcome sigh of relief.
A UPS strike would have cost the US economy billions in losses, causing countless delays, stockouts, and other supply chain issues. Though a strike was ultimately avoided, the threat of disruption this catastrophic has brought attention to ongoing vulnerabilities in fulfillment.
However, there could also be large-scale disruption in a brighter sense. Big changes to the shipping and logistics ecosystem, and a new playing field for innovative startups, could lead to better fulfillment strategies for businesses like yours.
Let’s look at the circumstances that led to the strike warning, plus ways to protect your business.
In early July, negotiations broke down between UPS and the Teamsters Union. This impasse meant that 340,000 UPS workers were slated to walk off the job on August 1st, when their contract expired.
Among the union’s demands were higher pay, better benefits, and stronger workplace protections. The union also demanded an end to forced overtime and the elimination of a wage system with unfair terms for part-time employees.
The agreement reached on July 25 included all of the above, as well as:
While this “new standard in the labor movement” may seem too good to be true for UPS workers, the strike warning came at an interesting time in US labor history — including the widely publicized SAG-AFTRA and Writers Guild of America strikes.
With huge economic risk and an increasingly large media spotlight, UPS proposed the five-year tentative agreement. This was unanimously endorsed by the UPS Teamsters National Negotiating Committee.
But for many businesses, other plans had already been made.
In the weeks leading up to the contract deadline, business leaders scrambled to shift their shipments to alternate carriers. Providers large and small stepped in to fill the gap (some a tad more assertively than others) as many modern commerce businesses began rethinking their logistics.
In preparation for the potential strike, UPS customers diverted roughly one million daily parcels to other carriers. UPS is now working to win back that volume.
CEO Carol Tome told analysts that in the weeks leading up to the strike, the company lost more volume than expected to other carriers. The company’s revenue has also dipped due to economic concerns and the end of the pandemic era of online shopping.
In recent years, UPS has doubled down on serving small businesses while placing limits on its dealings with Amazon — a move which Amazon has reciprocated by beginning to charge for UPS returns as it continues to fortify its own logistics network.
With carrier rates reaching an all-time high, UPS customers may still need to diversify their shipments to include smaller, newer, and more innovative carriers.
And a growing number of companies are rising up to help them meet that challenge.
In recent years, a number of companies have stepped up to revolutionize e-commerce fulfillment. From gig-based carriers to franchise delivery networks, the new “post-UPS” era of e-commerce shipping has arrived.
Let’s take a closer look at some of the latest developments in shipping and the new players who have emerged to help you scale more efficiently:
Reducing your reliance on large carriers can make your business more resilient to supply chain disruptions. However, it won’t necessarily protect you from future labor movements.
The Teamsters Union has been so vocal about its mission to unionize Amazon workers that Amazon has defense plans.
Fast-delivery platforms have likewise been targeted by labor movements, with Uber drivers striking earlier this year and Shipt facing lawsuits for the way it classifies workers. A new ruling issued in June by the National Labor Relations Board may make it easier for gig workers to unionize. This would increase the chances of strikes across the supply chain.
There’s no surefire way to “strike-proof” your business. However, there are some measures you can take to protect it from future disruption.
In the future of e-commerce, sellers need to diversify, diversify, and diversify.
Your range of fulfillment options should include large national (or international) carriers, regional offerings, instant delivery startups, and other last-mile innovators. Businesses that can afford their own delivery fleets should consider this option, too.
As more options spring up, alternative carriers could get more affordable for growing merchants. To start, explore the market and invest in a small portfolio of new carriers. Offer your customers different options, or automate your site to select the best option for each scenario.
To keep customers happy as you test your fulfillment options, consider services like Aftership to help them track their packages. Provide real-time tracking updates in their preferred format (e.g., app, email, text), so they feel in control of their orders.
You can also use backend applications that give you better visibility into your supply chain. This allows you to take immediate action on any orders that are delayed or disrupted.
Focus on providing the best possible customer service. Inform customers ahead of time if you anticipate shipping delays for any reason. This could include a notice on your website or a targeted email update.
You may also want to invest in omnichannel customer care service. Onepilot, for example, can help your team respond to customer queries right away.
Disruption can arise at any time. The best way to stay nimble and resilient is to have cash on hand for anything that arises.
With SellersFi’s tailored e-commerce financing solutions, you can secure the cash flow to keep your business moving through any crisis.
Explore our complete suite of financial solutions and learn how SellersFi can help you take your business forward.
