Retailers are getting worried about the looming UPS strike

UPS and the Teamsters union are getting closer to the July 31 deadline to agree to a new contract before 340,000 workers go on strike, and retailers are getting worried about a new round of supply chain chaos just as the scars of pandemic-driven disruptions have largely healed. Union drivers represent half of UPS’s workforce.

The Retail Industry Leaders Association (RILA), whose members include Target, Home Depot, and CVS, released a statement on Wednesday noting they are “growing increasingly concerned” over the looming strike, and that “uncertainty is like kryptonite for supply chains.”

There’s only so much prep retailers can do if UPS workers strike on August 1, according to RILA’s statement, especially ahead of the back-to-school and holiday shopping seasons. After years of supply chain upheaval, retailers are reluctant to “stress-test contingency plans again,” they said.

A 10-day strike would cost the economy more than $7 billion, making it the costliest strike in 100 years, per a report by Anderson Economic Group.

“We urge all negotiating parties to remain at the table until a deal is reached that keeps this vital supply chain link operating at full capacity,” the RILA said. The National Retail Federation (NRF) expressed similar concerns earlier this month, while smaller retail businesses are also reassessing their supply chains.

Contract negotiations began in April, and the union last month voted to authorize a strike if a deal couldn’t be hammered out. While the two parties reached a tentative agreement regarding air conditioning in delivery trucks, wage increases, particularly for part-time workers, remain a sticking point. UPS and the Teamsters union said they’ll return to the negotiating table next week, with UPS noting the two “need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses.”

UPS said it would train non-union workers to keep up with demand should the strike go forward. The USPS, meanwhile, said it’s prepared to handle more volume, the agency’s EVP, Jacqueline Strako, told Government Executive; last week, it introduced new ground shipping, Ground Advantage, to gain a larger share of the package delivery market.