UPS Warns Customers of Possible Freight-Worker Strike

(Bloomberg) -- United Parcel Service Inc. will halt pickups from freight customers as early as Friday because of a potential strike in less than two weeks by about 11,000 union workers.

Key Insights

  • UPS’s decision shows concern that the latest contract offer won’t be approved. The courier will accept overnight freight pickups through Nov. 7 and “work to empty our network of freight by Friday, Nov. 9,” according to a company statement.
  • The company’s lack of confidence is warranted because freight employees rejected a contract in October even though Teamsters leadership recommended it for approval. Workers will begin voting Nov. 7 on what the union called a “final offer,” with results set for Nov. 11.
  • The damage to UPS would depend on the length of the disruption. The freight business makes up about 5 percent of UPS’s sales. Supply Chain & Freight has the lowest profit margin of the company’s three units. The strike doesn’t affect the U.S. parcel business, which generates about 60 percent of revenue.

Market Reaction

  • UPS rose less than 1 percent to $107.52 at the close in New York. The company is trying to reverse a 9.8 percent slide this year.

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  • The union and company have been trading barbs. The Teamsters said they tried to get UPS to address workers’ concern such as more restrictions on subcontracting and pay protections for drivers who perform dock work. UPS says the deal offers pay “at the top of the industry.”
  • A new five-year contract with the 250,000 parcel workers was ratified in October.

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