This week in parcel, the UPS and Teamsters negotiations are coming down to the wire. It appeared the two sides had an agreement going into July 4, but those negotiations fell apart on the morning of July 5. While the current contract expires at the end of the month, both the carrier and the union want a deal in place as soon as possible.
Meanwhile, manufacturing declined for the eighth straight month and the USPS is losing its international volume. Will either bounce back?
UPS and Teamsters’ tentative agreement quickly collapses
While the two sides had reached agreements on all non-economic issues, they were far apart on economic issues.
Over this past weekend, the Teamsters Union announced it had come to a tentative agreement with UPS on three economic issues. This came less than a week after Teamsters demanded UPS present the union with an agreeable proposal.
The tentative agreement was short-lived, however. After negotiating through the July 4th holiday, UPS and Teamsters were unable to finalize the deal. UPS blamed Teamsters for walking away from the best offer in UPS’ history, while Teamsters claimed the carrier walked away from the bargaining table.
While the current agreement doesn’t expire until July 31, both the union and the carrier want to have a deal in place before then to allow time to properly implement it.
Our take: The negotiations will come down to the wire. In the meantime, shippers should consider seeking alternative carriers in the event of a work stoppage.
Manufacturing output down for eighth straight month
Manufacturing output in June saw a slight decline, and it was the eighth straight month of declining output. Before November 2022, manufacturing had 29 consecutive months of growth.
The PMI fell 0.9% last month to a reading of 46. Readings above 50 indicate growth. The decline in manufacturing output mirrors the decline in the overall economy, albeit at a slower rate.
Not all manufacturing sectors saw declining outputs. Four sectors, including primary metal and transportation equipment, grew.
Read more on manufacturing output here.
Our take: The downward trend in manufacturing in the U.S. continues, making for less demand in logistics services, including parcel. It continues to be a buyer’s market and it is time for all companies to be renegotiating their contracts.
USPS dealing with “unprecedented decline” in international volume
Despite a boom in the international e-commerce market, the USPS is dealing with “an unprecedented decline” in its international volume.
Its international volume coming into the country has decreased by 74% in the last five fiscal years while its outbound international volume fell by 38%.
While the USPS is struggling with volume both inbound and outbound, its struggles in both cases are unique. For inbound, shippers have shifted away from USPS because they can consolidate packages entering the U.S. as bulk commercial shipments. The USPS may still deliver some of these packages domestically for the so-called last mile, but they could enter the hands of other carriers as well.
The USPS’s outbound troubles stemmed from delivery times and reliability. Other carriers have surpassed the postal service in both areas, making it more logical for shippers to opt for other carriers.
Our take: The USPS continues to lose market share as other providers enter the market for cross-border shipping. If you have not already shifted your international volume, this is a sign it’s likely time to look into alternatives to the USPS. There may be more and better options than you realized.
Read more here.