Teamsters Strike: estimated losses

According to a Michigan-based economic consultancy if there is a Teamsters strike against UPS when the current contract closes on July 31:

  • A 10-day strike would likely furlough 340,000 workers, who are currently earning annual wages of approximately $90,000 per year (excluding benefits), resulting in wage losses of $1.1B.
  • Only a fraction of impacted deliveries would be filled by FedEx, USPS, other carriers, or direct delivery.
  • UPS customers could incur losses in excess of $4 billion.

Reuters and other media are reporting these potential economic consequences (here and here). Analysis by the Anderson Economic Group (same link as above) also highlights likely impacts on flows of crucial healthcare products (more). This specific risk has not — yet — received significant public attention. Over the weekend I reached out to two senior hospital supply chain professionals. Neither had begun to seriously consider potential risks or mitigation. While mid-stream operators are very aware (and worried) regarding potential strike risks, too many downstream players have not yet anticipated potential consequences… now two weeks ahead.

Last week (July 12) this blog gave particular attention to the strike’s potential impact on home delivery of chronic care medications. I asked three questions for which I still do not have answers.

UPS indicates that non-union employees are being trained to support “business continuity.” The Teamsters chief says he is waiting for UPS to call with a revised offer.

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JULY 18 UPDATE: The Bloomberg Supply Lines newsletter has a good round-up on UPS economic consequences (and a VERY good set of charts on recent global supply chain behavior). But — again — silence on potential slowed flows in the healthcare sector and related human consequences. Another Bloomberg report a few hours later offers, “Many logistics experts and financial analysts predict that a tentative agreement will be reached before the contract expires, though confidence has dwindled as the deadline approaches and talks are at a standstill. Many point to the lessons learned during the 15-day UPS strike in 1997: UPS ended up giving in to union demands after the company‚Äôs profit and service reputation were both hurt. As recently as May, UPS Chief Executive Officer Carol Tome said she expected to reach a deal before the contract expires.”

JUNE 19 UPDATE: UPS says it expects negotiations to resume with the Teamsters. According to Reuters, the company has a “better offer” to present. The Wall Street Journal explains:

A major sticking point is pay for part-time workers, which account for roughly half of the Teamsters workers represented by the current negotiations. The Teamsters are seeking starting pay for part-time workers north of $20 an hour. Currently, the minimum part-time hourly pay starts at $16.20, and could be higher in places where there is more competition for labor. UPS said that union-represented part-time workers make on average $20 an hour after 30 days. The union says there is high turnover among part-time workers in part because of the low pay, and that the majority of part-timers want to transition to full-time positions. The company said 38,000 part-time employees advanced to full-time positions between 2018 and 2022.