Last year saw UPS overtake FedEx as the world’s largest transportation company, according to an annual Forbes study. However, recent news of 340,000 UPS workers looking to strike at the end of this month could see the end of UPS’ prosperous year.
With the company estimated to transport 6 percent of the US gross domestic product in its trucks every day, a strike of this magnitude could have serious consequences for the US and global economies. From disrupted supply chains to driving up prices, a strike would see widespread impact across various industries that depend on timely deliveries.
In particular, e-commerce retailers are most at risk of negative fallout from a UPS strike. After several years of a turbulent economy, the rise of e-commerce has been credited with helping to mitigate the economic downturn caused by the pandemic. More consumers have looked to capitalize on the convenience and ease of online shopping and at-home delivery systems. Behaviors have shifted so much so, that e-commerce purchases are expected to account for 24.5 percent of all global retail sales by 2025.
With retailers more reliant on e-commerce than ever, how can businesses plan for the potential strike and mitigate disruption?
READ: A slowdown is a favourable time to prepare for a future upswing
Find alternative shipping providers
Businesses may wish to seek alternative shipping providers to tide them over while the strike is underway. FedEx, for example, will be accepting additional parcel volume for a limited time ahead of the strike.
However, finding a substitute carrier may be easier said than done. It’s estimated only 10 to 20 percent of UPS shipments could be picked up by other carriers in the event of a strike. Heightened pressure on competitor carriers means it’s likely the biggest companies won’t be able to fulfill all deliveries, leaving millions without their packages for days or weeks on end.
The best approach is for businesses to cast their net wide. Alongside the larger carriers, businesses should also forge relationships with smaller shipping companies. Having a diverse carrier strategy enable businesses to redirect shipments to other carriers if necessary.
Be sure to review the terms and conditions within your carrier contract regarding service disruptions and alternative arrangements first to identify any penalty clauses that may apply.
Anticipate higher delivery costs
With mounting pressure on alternative carriers to fulfill orders, increased shipping rates should be expected.
This is particularly true if switching to smaller carriers, where consumers can’t benefit from economies of scale due to UPS’ unrivaled size and capacity, or no relationships have been built with carriers to secure discounted prices.
Bulk order where possible
With fewer deliveries being made, businesses can expect production delays and inventory shortages caused by transportation disruptions, hindering the overall functioning of businesses.
Being proactive and ensuring stock levels are well-maintained ahead of the July 31 strike deadline could save a headache later on.
READ: Trends and challenges that could shape the airfreight market in 2023
Be transparent with customers
When disruptions occur, exceptional customer service can make all the difference in retaining customers and preserving brand trust. This means communicating openly so customers are not left in the dark about changes to products and services.
Make customers aware of any expected delays and provide reassurance. Email newsletters, updating websites and posting on social media can help get your message out quickly to customers.
Be prepared for additional fallout
The US narrowly escaped a recession in 2023, but severe supply chain disruptions and chaos to businesses could tip the economy. So, now is a good time to evaluate the resilience of supply chains and identify areas for improvement.
However, it’s important to keep in mind the impact of a UPS strike on the US economy would depend on the duration and severity of the strike, as well as the ability of alternative delivery services to absorb the increased demand.
Establishing contingency plans now can help prevent disruptions for any likely future strikes.
