UPS-Teamsters Negotiations Back On, Canada Port Strike Off Again (For Now)

Date: Friday, July 21, 2023
Source: Sourcing Journal

Labor tensions are keeping the North American supply chain in flux.

Locked in a stalemate since July 5, UPS and the Teamsters will return to the negotiating table next week.

And just a day after declaring their strike at the Canadian West Coast ports was back on, union dockworkers at the ports revoked a new 72-hour strike notice mere hours after it was issued, perhaps signaling the end of the back-and-forth between the International Longshore Workers Union (ILWU) and their employers, the British Columbia Maritime Employers Association (BCMEA).

In the U.S., more than 340,000 union UPS workers across delivery and warehouse logistics are seeking a new five-year agreement and better pay for full- and part-time workers. They insist they will strike on Aug. 1 if they don’t get a deal done by July 31.

“We are pleased to be back at the negotiating table next week to resolve the few remaining open issues,” said UPS in a statement. “We are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country.

The on-again talks could increase the likelihood of reaching a new contract.

“We believe an Aug. 1 strike at UPS remains possible but not yet probable,” Susquehanna analyst Bascome Majors said in a client note. “Official news that Teamsters-UPS negotiations restart next week after a 2.5-week break clears a path to ‘get to yes’ before the deadline.”

The implications of such a strike, which would also include 3,300 union pilots represented by the Independent Pilots Association (IPA), are far reaching. One consulting firm, Anderson Economic Group (AEG), says a 10-day strike would drive more than $7 billion in economic losses.

And that’s before getting into inevitable service disruptions, with UPS accounting for 24 percent of total parcel volume shipped in the U.S.

As the July 31 deadline looms, shippers face higher costs and limited options to shift volumes away from UPS in the event of a strike, as deadlines set by FedEx and regional carriers for shippers to secure capacity have passed. Ahead of the last-minute rush, one analyst said shippers have been slow to the punch in making a shift.

“We have not seen significant shifts away from UPS despite concerns of a strike, signaling confidence in a timely resolution and the value shippers place on established discounts. In some cases, reallocating volumes to another carrier at this stage could move shippers to lower discount tiers and add significant additional cost,” said Micheal McDonagh, president of parcel for third-party logistics (3PL) provider AFS Logistics. “Carriers are not incentivized to activate additional capacity to serve as a temporary, stop-gap measure to accommodate temporary shocks. Scaling up networks with additional capacity requires long-term commitments from shippers.”

Canada port strike halts after Trudeau convenes committee

Despite the apparent end of the West Coast port strike in Canada, the BCMEA called the situation “fluid and unpredictable” Wednesday evening, saying, “We will communicate as appropriate with key stakeholders as we receive clarification.”

The unpredictability stems from a 24-hour stretch which saw the ILWU vote down the tentative settlement terms Tuesday—effectively going back on strike—before a federal watchdog deemed it illegal the next day. After setting up a new strike notice, the union reneged when Prime Minister Justin Trudeau convened a meeting of the country’s Incident Response Group, which is comprised of senior officials and ministers and only meets to deal with criss. It is not clear if Trudeau or the group met with or contacted the union.

Early Wednesday, Canada’s Industrial Relations Board (CIRB) struck down the dockworkers’ work stoppage as illegal because no formal strike notice had been posted 72 hours in advance of a work stoppage.

In response, the ILWU contended in an official statement that the CIRB was in the wrong, and its original strike notice of July 1 was still in effect and allowed its workers to renew the strike. The ILWU released a new strike notice saying it would stop work on Saturday.

According to a statement from Trudeau’s office Wednesday, “The Prime Minister stressed the critical importance of resuming operations in our ports as soon as possible. Workers and employers across Canada—and all Canadians—cannot face further disruption. He asked ministers and senior officials their advice toward achieving this goal and directed them to pursue all available options to ensure the stability of our supply chains and to protect Canadian jobs and our economy.”

ILWU Canada said late Wednesday that the strike notice was removed “effective immediately,” but did provide other details.

 

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