Looming UPS strike spurs some companies to rethink supply chains

Kathryn Keeler and her husband, Stuart de Haaff, own an olive oil company in the hills of central California.

The couple spends their days harvesting olives, bottling the oil, labeling the glass bottles and shipping them out, relying primarily on UPS to get their product to kitchens throughout the United States.

They are far from alone. UPS handles about one quarter of packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index, many of them for small businesses like Keeler’s company, Rancho Azul y Oro.

But with the labor contract between UPS and 325,000 of its workers expiring at the end of the month and a potential strike looming, business owners around the country are facing what could be the latest in a series of supply chain disruptions that they have confronted since the start of the pandemic.

Some are pre-emptively turning to FedEx, the next largest private carrier in the United States, or the U.S. Postal Service, which generally handles lighter packages.

Others are calling their third-party shippers – firms that work with the likes of UPS, FedEx and DHL to handle their clients’ shipping needs – to ensure that their packages can still get to their final destinations even if there is a strike.

The logistical challenge is just one more burden on businesses that have been stretched thin over the past few years.

“Maybe a larger business can withstand those types of situations,” Keeler said. But as small-business owners, she and her husband “don’t have a lot of extra time in our day to be on the phone with the post office or FedEx.”

Since 2020, the pandemic has strained the global supply chain in a number of ways.

E-commerce reached record levels as stuck-at-home Americans bought clothes, furniture, workout equipment and groceries online.

Companies had to navigate COVID-related shutdowns at factories in China and Vietnam. There were worldwide delays when a large container ship got stuck in the Suez Canal, leading to containers piling up at the Port of Los Angeles.

Those situations affected the way goods came into the United States.

A UPS strike could hobble the way brands move their wares domestically.

“This is something that affects us on our home turf, and how do we solve for that?” said Ron Robinson, the CEO of BeautyStat Cosmetics, which uses UPS to ship its skin care products to retailers such as Ulta and Macy’s.

One strategy that his team will lean on is trying to bundle packages, sending as many as it can out at once, he said.

Switching to another carrier is going to cost some companies.

Ryan Culver, the CEO of Platterful, a monthly charcuterie board subscription service, also uses UPS. Switching over to FedEx Express – necessary to ensure the meats in his packages reach consumers in time – would cost about $5 to $10 more per delivery.

Teri Johnson, the founder of Harlem Candle Co., received an email June 26 from her third-party shipper about a potential UPS strike. It suggested she switch to FedEx. That will cost her about $2 extra for each candle that gets shipped in the greater New York area. Sending her candles to California will cost even more.

“We don’t really have a choice right now,” Johnson said.

FedEx said it was accepting additional volume for a limited time and would assess how much capacity its network could accommodate.

“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,” the company said in a post on its website Thursday.

The Postal Service did not immediately respond to a request for comment on how it was planning for a potential UPS strike.

Larger companies are relying on sophisticated backup plans that have been tested over the past few years.

The pandemic and previous tariff trade wars pushed many major retailers with global supply chains to diversify the countries where their vendors are and the parcel carriers they use.

“We’ve been focused on investing in a lot of transportation solutions that allow us to more nimbly move freight between carriers,” said Alexis DePree, the chief supply chain officer at Nordstrom. “We can do that with a lot more flexibility and speed than we were able to in the past.”

Some third-party carriers are seeing a boost in their businesses as the possibility of a UPS strike comes into focus for their clients.

Stord, a third-party logistics and technology provider based in Atlanta whose clients include apparel makers and consumer-package companies, has been sending emails out telling its clients not to worry.

Stord uses a cloud-based platform to offer services like warehousing and fulfillment and handles tens of thousands of their packages a day.

By combining the volume of its broad portfolio of client brands and using software to make decisions, Stord has the leverage to better negotiate prices with the large parcel carriers, said Sean Henry, the company’s CEO.

“We’ve been negotiating with FedEx and USPS about rates around UPS so our customers don’t have to do that,” he said.

Stord said more of its clients had asked it to negotiate with carriers on their behalf. He said that equated to “tens of millions of dollars of annual revenue” for his business.

Still, some business owners are not letting the possibility of a UPS strike stress them out just yet.