US forwarders told to brace for UPS strike action disruption

Date: Tuesday, July 18, 2023
Source: Air Cargo News

US freight forwarders have been told to brace for the impact of potential strike action at UPS and major trucking firm Yellow Freight going insolvent.

Brandon Fried, executive director of the Airforwarders Association, said that supply chains are facing a “perfect storm” that would disrupt the flow of goods across the country.

The disrutpion would lead to shortages, price increases, delays, the devastation of a portion of the economy, job losses, business closures and higher consumer prices, he said.

He pointed out that the last time UPS workers went on strike in 1997, supply chains were thrown into disarray.

“In 1997, UPS workers went on strike for 10 days, and the impact was widespread,” Fried said. “Freight forwarders and UPS competitors were overwhelmed with cargo as a result.

“While many freight forwarders experienced unsurpassed shipment volumes and profits during those 10 days, most shippers returned to UPS after resolving the strike.

“However, some retained a few UPS shippers as customers.”

He added that since 1997 new security requirements have been added that mean first-time airfrieght shippers need to be validated through the Known Shipper Program, which can create delays to shipments.

“These and other security requirements mean that if UPS were to go on strike today, the impact would be even more severe than in 1997,” Fried said.

“Businesses would have a more challenging time finding alternative ways to get their products to market, and consumers would be more likely to experience shortages and price increases.”

Fried recommened that forwarders advise UPS shippers to start validating with the Known Shipper Program; contact shippers that they may know use either of the two companies in case strike action or bankruptcy occur; and advise shippers to expect delays and stay to with the latest developments.

“The potential for a UPS strike and Yellow Freight bankruptcy severely threatens the US economy,” said Fried.

“Freight forwarders have a responsibility to help their shippers to prepare for this possibility. By taking the steps outlined above, freight forwarders can help to ensure that their shippers can weather the storm.”

Contract negotiations between UPS and unions last week broke down with the current contract representing 340,000 workers due to expire on July 31.

Workers represented by the union have already authorised strike action and have said they will not work beyond the expiration of the current contract.

Shortly after discussions broke down, FedEx issued a statement highlighting the potential of “industry disruption”.

“In the event of an industry disruption, FedEx Corporation’s priority is protecting capacity and service for existing customers,” it said. “Therefore, shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to begin shipping with FedEx now.”

Meanwhile, less-than-truckload firm Yellow Freight (formerly YRC Worlwide) was this week granted a reprive from lenders to give it time to negotiate with unions as part of restructuiring efforts.

The company is attempting to re-finance debts of $1.3bn, including a $700m federal government emergency Covid loan, that is due to be repaid next year.

The company is the thrid largest LTL company in the US and employs around 30,000 people.


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