Despite record profits in 2021, Carriers face an unprecedented issue as workers threaten to walk out in protest over unfair wages and adverse working conditions. UPS reported record profits of almost $13 billion in 2021, yet they cut hourly pay for many part-time workers and are facing strikes from employees who are dissatisfied with low wages, lack of overtime protections, unsafe working conditions, and harassment over their requests for these issues to be addressed. 

Likewise, the US rail system is confronting a potential strike that threatens to delay the transportation of goods by sea from Asia to North America and by land within the US. The trans-Pacific route is critical to our global economy—in July 2022 alone, approximately $47 billion in goods were imported to the US from China along this route. Once the goods are unloaded on the West Coast, they are normally transported inland via rail, but disruption of the sea-land transportation system will delay incoming vessels, causing a backlog of goods and increases in freight rates as demand for trucking and other transport increase. 

Looming strikes are already affecting businesses that are still in recovery mode from a pandemic-weakened economy and disrupted global supply chain. In anticipation of a US railway strike, container goods are now stuck at railway yards due to lack of manpower and equipment, causing delays and cost increases for storage. A UPS strike will have an adverse effect on a majority of US businesses; it will disrupt deliveries, limit customer options, and increase costs. After all, the Carriers who remain in the game are now in greater demand and will charge for the burgeoning need for their services, staff, equipment, and resources. 

Businesses can proactively address the negative impact of Carrier strikes—such as higher shipping costs and delivery issues—by targeting two key areas: Carrier Agreements and Shipping Logistics. This dual focus allows businesses to: 

• Leverage the expertise of partners well-versed in Carrier negotiations to navigate the unique situation posed by pending strikes 

• Exercise control over costs and shipping issues through data and logistics management 

STRIKE STRATEGY #1: Businesses can strengthen their position in the face of Carrier strikes by analyzing Carrier contracts to determine ways to cut costs and expose hidden expenses. Perhaps the most important contract strategy to consider during a Carrier strike threat is diversification. A seasoned parcel and transportation analyst will have established strategies that give businesses an edge in acquiring the best rates and terms from a range of Carriers. Furthermore, if a particular Carrier is affected by a strike, contracts with others will ensure that backup options for delivery are already in place. Another effective strategy to consider is a thorough review of existing contracts. Carriers facing a strike may be more willing to negotiate better rates, conditions, and terms. 

STRIKE STRATEGY #2: Use logistics technology to analyze your business’s unique data and systems to find custom ways to reduce costs and mitigate delivery issues. 

Many businesses enjoyed a brief reprieve when freight rates decreased over the last year due to waning consumer demand and overstocked inventory. However, this is set to change and not only because of the uptick in consumer spending during the holiday season. Current disruptions in the sea route, combined with warehouses full of stagnant goods, creates a situation that threatens to drive freight rates back up. For b2b and e-commerce businesses, it’s a situation that inevitably causes expensive delivery delays, errors, and, ultimately, customer dissatisfaction. 

Businesses can proactively manage rising costs and delivery challenges by leveraging technology designed to analyze data and reveal areas where costs can be reduced and efficiency improved. Using the power of algorithms and AI employed by Logistics Programs, businesses can manage pricing, perform competitor comparisons, and analyze profitability. Logistics programs can also provide customized rate tables and recommendations for shipping systems along with valuable ship-to-store distribution models. 

An effective way to gain control of costs and improve overall delivery is to gain better visibility of your shipping spend and processes. Reporting insights and metrics educate and inform, so you can analyze your company history and find targeted ways to cut costs and improve ongoing practices. 

Your potential for parcel shipping success can be strengthened this holiday season, despite the negative impact of (pending) Carrier strikes, by tapping into the expertise of consultants. We have been negotiating favorable Carrier contracts for clients too numerous to count, and we offer the cutting-edge logistics programs needed to thrive in today’s market. For more information, contact LJM Group at https://myljm.com. 

Sources: 

https://amp.theguardian.com/us-news/2022/sep/05/ups-workers-teamsters-union-contract

https://www.cnn.com/2022/09/13/business/railroad-strike-outlook-economic-impact/index.html

https://www.bloomberg.com/news/articles/2022-09-15/us-rail-strike-threat-risks-delays-on-47-billion-shipping-route