This week in parcel, the Teamsters Union is demanding UPS present an agreeable counteroffer within the next week. While the current agreement doesn’t expire until July 31, the union is wary of the carrier prolonging the implementation of the next agreement.
Amazon and FedEx are making adjustments. Amazon is looking to expand its Hub Delivery Program, turning over last mile delivery to 2,500 small businesses. FedEx, meanwhile, is scaling back amid declining demand.
Teamsters want agreement with UPS in 1 week
Teamsters’ contract with UPS doesn’t expire until the end of July, but the union is demanding a tentative contract agreement within the next week. This demand comes on the heels of UPS purportedly returning to the bargaining table earlier this week without making a counteroffer.
The union wants a contract that begins on August 1 and will not work under the current contract terms past July 31. Teamsters told UPS the union was committed to working around the clock and through the coming holiday to reach an agreement.
The two sides have reached agreement on all noneconomic issues, but the union rejected UPS’ most recent counteroffer to its initial proposal.
Our take: It’s getting to crunch time for the UPS labor negotiations. Teamsters are saying they’ll be playing hardball and will not work past the July 31 deadline without a contract. It’ll be difficult to find alternatives to UPS at this point for shippers, so it’s time to start gearing up your plans B and C if the worst happens.
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Amazon turns to local small businesses to deliver packages
Amazon is looking to turn to more than 2,500 small businesses to deliver packages for it by the end of the year. Through the “Hub Delivery” program, partners using their own vehicles and staff commit to delivering 20 to 50 packages a day. The company is looking for partners in 23 states.
The Hub Delivery program diversifies the ways Amazon can complete last mile deliveries, and the company is targeting small businesses in rural areas to complete these deliveries. Partners can earn up to $27,000 per year through the program.
Our take: B2C delivery is difficult and expensive; FedEx, UPS, and Amazon know this better than anyone. Amazon, at least, continues to look for creative ways to provide cost-efficient residential delivery options. This innovation could pay off in the long term for Amazon as a carrier.
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With demand down, FedEx turns to layoffs, cost-cutting measures to save
With consumers continuing to opt for experiences over goods, FedEx experienced another quarter of declining revenue. To offset these losses, the carrier is opting for restructuring, which includes layoffs and facility closures.
The declining revenue has pressured FedEx to eliminate inefficiencies. The carrier plans to cut $4 billion in costs over the next two years.
FedEx’s issues likely stem from the beginning of the pandemic, when goods were in high demand, requiring the carrier to ramp up. With demand falling back down, the carrier is now working down the excess.
Our take: The financials are confirming what we’ve all known for a while. FedEx is struggling to keep up with UPS when it comes to performance, and the exceptionally good times enjoyed by the carriers during the pandemic are definitely over.
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