The UPS strike is prompting some companies to rethink their supply chains

Kathryn Keeler and her husband, Stuart de Hoff, own an olive oil company in the hills of central California. The couple spends their days harvesting olives, bottling the oil, labeling glass bottles and shipping them out, relying primarily on UPS to transport their produce to kitchens across the United States.

They are far from alone. UPS handles about a quarter of all packages shipped in the United States each day Pitney Bowes Parcel Shipping IndexMany of them Ms. For small businesses like Keeler’s Company, Rancho Azul y Oro.

But with a labor contract between UPS and 325,000 workers set to expire at the end of the month and a strike likely, business owners across the country face the latest in a series of supply chain disruptions they’ve faced since the beginning. Epidemic

Some cautiously turn to FedEx, America’s next largest private carrier, or the U.S. Postal Service, which typically handles lighter packages. Others call on third-party shippers that work with companies like UPS, FedEx and DHL to handle their customers’ shipping needs — to make sure their packages can still make it to their final destinations despite a strike.

The logistical challenge is still a burden for businesses stretched thin over the past few years.

“A big business can withstand those kinds of situations,” Ms. Keeler said. But as small business owners, she and her husband “don’t have 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 many ways. E-commerce hit record levels as stay-at-home Americans bought clothes, furniture, fitness equipment and groceries online. Companies have had to go through Covid-related shutdowns at factories in China and Vietnam. Worldwide delays were caused when a large container ship got stuck in the Suez Canal, causing a pile-up of containers at the Port of Los Angeles. Those conditions affected the flow of goods into the United States.

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A UPS strike could prevent brands from moving their goods domestically.

“It’s something that affects us on our home turf, how do we solve it?” said Ron Robinson, chief executive of BeautyStat, which uses UPS to ship its skin care products to retailers like Ulta and Macy’s.

One strategy his team relies on is to try to bundle packages, sending as many as they can at once, he said.

Switching to another carrier can cost some companies.

Ryan Culver, CEO of Platterfull, a monthly charcuterie board subscription service, also uses UPS. Switching to FedEx Express — necessary to ensure the meats in his packages reach consumers on time — costs $5 to $10 more per delivery.

Teri Johnson, founder of Harlem Candle Company, received an email on June 26 from her third-party shipper about the UPS strike. He suggested switching to FedEx. Each candle will cost an additional $2 for shipping within the greater New York area. Shipping her candles to California cost even more.

“We have no choice now,” Ms Johnson said.

FedEx said it will accept the additional volume for a limited period and assess how much capacity its network has. “Shippers who are considering transferring volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to start shipping with FedEx now,” the company said in a post on its website Thursday.

The USPS did not immediately respond to a request for comment on how it plans for a possible UPS strike.

Large organizations rely on sophisticated backup programs that have been tested over the past few years. The pandemic and previous tariff trade wars have prompted many large retailers with extensive global supply chains to diversify the countries in which their vendors are located and the parcel carriers they use.

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

Some third-party carriers are seeing a boost in their businesses as their customers focus on the possibility of a UPS strike. Stord, an Atlanta-based third-party carrier whose customers include apparel makers and consumer-package companies, sent emails to its customers not to worry. Stord uses a cloud-based platform to provide services such as warehousing and fulfillment and handles tens of thousands of packages per day.

By combining the scale of a broad portfolio of client brands and using software to make decisions, Stord has the ability to negotiate better prices with major parcel carriers, said Sean Henry, the company’s chief executive.

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

Stort said more of his clients have asked him to negotiate with carriers on their behalf. He said that equates to “tens of thousands of dollars in annual revenue” for his business.

However, some business owners aren’t letting the possibility of a UPS strike dangle yet.

Bill McHenry, president of Widgeteer, which sells cookware to major retailers, said there was a “kind of numbness” after navigating the challenges of the pandemic. “The stories I have heard and many things I have seen. .

He said that the upcoming rail strike in December is a big concern for him.

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Meanwhile, there is a possibility of a deal between UPS and the union representing its workers. The union announced on Wednesday that talks had broken down, after earlier saying the sides had reached a tentative agreement. If no agreement is reached, there will be a strike from Aug. 1.

If that happens, “we’ll be collateral damage,” Ms. Keeler said.

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