UPS Strike 2023: The Supply Chain Apocalypse
United Parcel Service is facing backlash from its Teamsters union members who have begun a call to action across the country with rallies, leafleting actions and social campaigns. Their goal: to negotiate the best contract for employees in the history of the company.
With the contract approaching its end on July 31st 2023, union members and employee activists have stated that they won’t wait a single day to strike if they’re not presented with terms and conditions acceptable for all workers.
As per Statista, UPS had a 35% market share of express and courier service providers in the US in 2020. With the figure only rising in the past two years, companies relying on UPS are bound to think about the upcoming crisis as the contract ends.
Needless to say, eCommerce is going to be hit as deliveries are rerouted or halted and products line up along supply chains.Â
Although there’s no real risk of a strike before then, once it happens, there’s no telling how long it will take for the workers to feel that they’re receiving fair compensation to continue working.
As of now, tensions are rising and companies that rely on UPS are thinking about ways to minimize the damage by seeking ways to reform their supply chains ahead of the inevitable crisis.
This is why we present you the 5 major recommendations we’ve identified to be the best decisions an eCommerce company relying on UPS as its sole carrier can consider:
5 Recommendations for eCommerce Businesses to Avoid Supply Chain Problems in 2023
- Diversify Carriers
- Diversify Fulfillment Network
- Have a Reliable Tech Stack
- Adjust Marketing Plans
- Diversify Sales Channels
1. Diversify Carriers
The first thing all companies should understand is that once UPS goes down, there will be a lot of pressure felt by other carriers. Regardless of how long the strike is, whether it’s a day or a month, it’s going to impact major supply chains across the country.
While some may see this as a chance to renegotiate better rates with UPS (and it’s a good idea for the post-contract future), it’s not going to help you get through the months leading up to and following the strike.
All parcel carriers in the country could be asked to absorb the overflow from UPS as brands try to meet their deadlines. And it’s clear that there’s a limited window of opportunity for companies to negotiate contracts with carriers like DHL and FedEx.
Carriers like FedEx and DHL may be open to discussions now but they won’t be once the storm hits. Some companies are reporting that FedEx representatives are asking for a minimum of 10% of a company’s parcel business in order to consider a deal.
The situation could only get worse for companies that continue to wait and see. Although you’re not likely to see discounted rates from any of them, getting a deal going should be the main priority.
Once events leading up to the strike become more frequent and common, it’s going to force businesses to rush over to these other carriers who’ll already be swimming in a sea of leads and more than favorable contract deals.
Now would be a great time to explore regional carrier options that specifically provide coverage for smaller geographical locations. Yes, it would mean getting more and more carriers to work with but in order to curtail the impact of the strikes, it’s imperative that brands have multiple options.
So, should you cancel your contract with UPS?
No. Keep them on your network and try negotiating better rates given the situation. Also, prepare for the days and weeks that they may not provide service.
Should you contact other carriers?
Yes. Diversify your carrier network and explore options to have backup plans in case of a strike. Make sure to do this before carriers get too much attention and stop replying to your emails. Â
2. Diversify Fulfillment Network
Your fulfillment center is bound to be connected to a carrier. Compared to the total, only a select few FCs are carrier-agnostic, meaning they’ll accept shipments from any carrier so long as it abides by their packaging and shipment rules.
Most of the FCs presently are configured to work exclusively with UPS, making them as vulnerable to the strike as UPS itself. Some fulfillment centers might have the flexibility to comply with changes in carrier services, but many will not.
If your FC refuses to work with other carriers, now would be a great time to consider diversifying your fulfillment network.
Fulfillment centers work with variable capacities and it’s better to have several options as backup, preferably ones that can manage your inventories without disruptions. This is especially important for businesses that have a long line of summer sales to plan for.
3. Adjust Marketing Plans
There are times when you have to control the demand for your brand in order to curtail the impact of supply chain issues. Particularly in scenarios like the one being predicted to happen with the 2023 UPS contract renewal, companies that are relying on UPS might want to adjust their marketing plans accordingly.
This could be a good time to save financial resources being spent on influencer marketing, digital advertising, social campaigns, etc. There are several marketing strategies that can be put on hold to avoid shortages and keep a steady stream of revenue flowing.
Since an expectation date for the possible strike is known, it’s plausible for brands to institute campaign strategies with early discounted opportunities.
So long as the supplies are running well, brands could promote an early holiday sale and make the most of the market until August rather than waiting for the contract renewal to complicate the selling process.
Additionally, you should also prepare your CX teams for the time that you expect disruptions in deliveries and meeting inventory demands. Have prepared responses for frustrated customers but prioritize your customers as per your inventory status.
4. Reliable Tech Stack
If you’re going to be working with multiple carriers and fulfillment centers, you should have a reliable tech stack that can ensure proper communication and visibility of operations with each one.
This means having a scalable ERP system that can integrate with your partners’ systems and give you a simple interface to carry out operations.
Legacy order management may work with individual partners or perhaps even a couple, but when you bring in bigger numbers, you just can’t do it without automation.
Switching now will provide you with sufficient time to gather analytical data to gauge the performance of your fulfillment and shipping partners.
5. Diversify Sales Channels
Many brands that have already started selling retail are reaping the benefits of dealing with giants like Target and Walmart. Those who haven’t should consider getting into retail and diversifying their sales channels to include platforms like eBay, Amazon and others as well.
The time of the strike will make it difficult for all carriers to fulfill orders but most prominently, it will hit major eCommerce supply chains that rely on UPS for fulfillment.
Though other carriers will be busy filling in the gaps, your only option will be to have several different sales channels and supply chain alternatives.
It’s important to understand that all changes in a supply chain should be made early on in order to have more time to evaluate the results. Not only will you take time to find and negotiate with other partners and vendors, but you’ll also need time to set up an omnichannel approach.
Want to Minimize Damage?
Call experts at Izba and have us conduct an audit to see where you’re likely to face problems with the upcoming crisis and how you should go about minimizing its impact on your business!
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