Shipping giants such as Amazon, FedEx and the U.S. Postal Service are gearing up for a potential strike at United Parcel Service (UPS) that could begin on Aug. 1 if the company’s negotiations with the Teamsters union fail to yield a deal.
UPS and the Teamsters union are set to resume talks on Tuesday aimed at averting a strike that could throw the U.S. logistics industry into disarray if a deal isn’t reached by July 31, which is when the current Teamsters contract that covers about 340,000 full- and part-time UPS workers expires.
The significant role that UPS plays in the U.S. logistics system has raised concerns about the impact of a protracted strike on the economy if consumers and businesses see shipments delayed for an extended time.
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An estimate of the potential economic impact of a strike by the Anderson Economic Group, a think tank that specializes in the effect of labor strikes, found that a 10-day strike by the UPS Teamsters could cause economic losses of more than $7 billion, including at least $4 billion in UPS customer losses and lost wages of more than $1 billion.
With that much money on the line, shipping companies are assessing their options for picking up the slack in the event of a strike and marshaling their resources to best serve their customers.
E-commerce giant Amazon has in recent years diversified its delivery channels and increased its in-house delivery capacity. That was in part due to a decision by UPS to establish a maximum package volume agreement with Amazon, which resulted in the percentage of UPS revenue derived from handling Amazon shipments declining from 13.3% in 2020 to 11.3% in 2022, according to UPS securities filings.
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Amazon told FOX Business that while it’s aware of a potential strike by the UPS Teamsters, it doesn’t expect consumers to see much of a disturbance to their delivery timelines in the event of a strike.
"While we’re watching what is happening, we don’t expect a significant impact on customer deliveries," an Amazon spokesperson told FOX Business in a statement. "We work with a large network of carriers and delivery service partners and most of our customer orders are delivered through our own last mile network."
"Our focus remains on customers and ensuring we’re providing low prices, vast selection and fast delivery. We know how important fast delivery is to our customers, and it’s why we’ve been working to streamline our network and increase delivery speeds – we expect Prime speeds to be faster than ever this year," Amazon added.
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In early July, FedEx published a statement to explain that the company will prioritize its existing customers if the shipping industry’s services are disrupted.
"In the event of an industry disruption, FedEx Corporation’s priority is protecting capacity and service for existing customers. Therefore, shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open an account, are encouraged to begin shipping with FedEx now," the company’s statement reads.
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The U.S. Postal Service (USPS) told FOX Business that the agency has the capacity to absorb a potential increase in shipping volume.
"The Postal Service has a strong network, and we have the capacity to deliver what is tendered to us," a USPS spokesperson said.
