Threatened UPS Strike Could Cost US Economy Billions

A looming strike at United Parcel Service (UPS) could have a sharp economic impact.

A strike could cost over $7 billion in losses for just one 10-day work stoppage, Reuters reported Thursday (July 13), citing findings from Anderson Economic Group (AEG). The findings include estimates for customer losses of up to $4 billion and lost direct wages of more than $1 billion.

The 340,000 union-represented UPS workers are responsible for about a quarter of America’s parcel deliveries, so a strike could delay millions of orders, according to the report.

AEG CEO Patrick Anderson said, “Consumers are going to feel this within days,” adding that his analysis did not include “the human cost of disruption to shipments of critical and perishable medicines to treat cancer and other life-threatening illnesses,” the report said.

With no resolution in sight, the current contract expires on July 31 at midnight.

A major sticking point in negotiations is the pay for part-time workers who account for roughly half the UPS workforce, according to the report. Tenured part-timers feel particularly frustrated, as new hires have seen increased wages in a tight labor market.

UPS is urging Teamster negotiators to return to the bargaining table, but union officials say UPS needs to sweeten its offer to reward the workers who have risked their lives during the pandemic to help the company generate outsized profits, per the report.

Stifel analyst Bruce Chan told Reuters UPS is between a rock and a hard place, saying, “Both situations would create pain for UPS, so it could just be a question of when and how the company wants to take its medicine.”

The situation has been compared with the 15-day strike by UPS in 1997, which caused a serious disruption to the supply of goods and cost the world’s biggest parcel delivery firm $850 million, the report said.

This report comes at a time when UPS and FedEx are facing increased competition in last-mile delivery in the form of smaller regional and superregional carriers and the expansion of logistics operations among some major retailers like Walmart.

The looming possibility of a labor strike at UPS is contributing to the rise of alternatives.