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Businesses and Marketers Should Prepare for the Looming UPS Strike

Erin Morningstar, Director of Client Strategy | Seattle, WA

July 2023

Update: On July 25th, UPS avoided a workers' strike by reaching a labor deal with the Teamsters Union.

Background

Negotiations between UPS and Teamsters-represented workers have stalled, with both sides accusing each other of abandoning talks. If the current contract expires on July 31st without a new agreement, a strike involving 340,000 unionized UPS workers is highly likely. This potential 10-day strike is projected to be one of the costliest in a century, with estimated losses of $4 billion for UPS customers, according to the Anderson Economic Group. The last UPS Teamsters strike occurred in 1997 and had significant economic consequences. Since then, package shipment volume has surged, with an average of 59 million daily packages sent in the US in 2021. With a 24% market share, a walkout by UPS workers could cause substantial delays affecting millions of shipments. Competitors like FedEx are urging UPS customers to switch, but experts doubt their capacity to handle the resulting backlog. Although UPS has started training its nonunion workforce (around 100,000 employees in the US) to manage operations during a strike, it remains inadequate for handling UPS's entire volume.


What Does It Mean for Brands?

A strike will cause significant disruptions for businesses relying on UPS for inbound shipping and order fulfillment. While there is some indication that consumers are becoming less fixated on fast shipping and prioritizing factors like Free Shipping and Easy/Free Returns, it's important to note that nearly all customers (91%) still expect their orders to arrive within 7 days. Furthermore, 70% of customers expressed discontent if their orders failed to arrive on time. In situations of fulfillment disruptions, effective communication is crucial.


Businesses affected by the strike should consider the following actions:

  1. Explore alternative shipping providers, giving preference to regional or local options to avoid overwhelming major competitors who may experience a surge in volume. Recognize that 58% of consumers prefer retailers offering flexible delivery options (such as varied shipping speeds, in-store pickup, curbside delivery, etc.). Thus, even in the absence of a strike, providing multiple options will remain important.
  2. Plan for appropriate messaging on order checkout and shipping pages, such as informing customers that their orders may be impacted by labor disruptions. If multiple shipping options are available, consider highlighting non-UPS fulfillment options on the order page.
  3. Develop a strategy for handling return windows if customers attempt to return products during the strike.

For Marketing Teams:

  1. If you anticipate being unable to fulfill orders, consider pausing or reallocating marketing budgets. Focus on upper-funnel activities such as audience growth and engagement to generate momentum for lower-funnel spending once normal operations resume.
  2. Narrow your targeting to markets where you have physical stores and emphasize options like BOPIS (Buy Online, Pick Up In-Store) or in-store shopping. Monitor and analyze changes in sales volume across offline channels during this period.
  3. Similar to high-volume sales periods or holidays, closely monitor inventory levels. Keep a close eye on out-of-stock items and be prepared to prioritize products that are available, adjusting your creative to feature them. Collaborate with your agency or internal team to develop playbooks for how to respond to out-of-stock products.
  4. If you sell wholesale and your retail partners are capable of fulfilling orders faster than your direct-to-consumer (DTC) e-commerce business, consider prioritizing retail media spending.
  5. Prepare email campaigns for affected customers, maintaining transparency about the status of their orders and keeping them informed about any additional delays. Consider sending proactive email campaigns specifically for loyal customers, addressing the potential for delayed shipping. This is particularly important for brands offering auto-replenish or subscription-based products that may be impacted.
  6. Temporarily adjust loyalty incentives for customers willing to tolerate delays, expressing gratitude for their patience and loyalty with a message like "Thanks for riding with us."

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