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UPS Strike Could Cost U.S. Economy Billions—Here’s How It Would Impact Consumers And Businesses

A potential strike against the UPS delivery service by 340,000 workers could lead to slower delivery times, supply chain disruptions and higher shipping costs if the company and the Teamsters union don’t come to an agreement over pay for part-time workers and cost of living adjustments by August 1—possibly causing billions of dollars of economic damage.

UPS employees deliver tens of millions of packages per day, the company says, and its competitors like FedEx, the U.S. Postal Service, DHL and other services won’t be able to absorb that kind of backlog if workers walk off the job in the largest strike against a single employer in U.S. history.

A 10-day UPS strike would be the most expensive strike in at least a century, costing the U.S. economy upwards of $7 billion, a study by the consulting firm Anderson Economic Group found, including $4.6 billion in losses for customers, $1 billion in lost wages and more than $800 million in direct losses at UPS.

Packages going to rural areas with fewer alternative delivery options or coming from small businesses that can’t afford to switch providers will be among the hardest hit with slower delivery times, Ohio State University logistics professor Terry Esper told Forbes, and big retailers will likely fare better because they already use a variety of delivery services.

Supply chains for things like medical gear and car parts could also be hit hard because those sectors locally rely on business-to-business shipments from wholesalers to operate, Esper said, adding that millions of daily UPS packages are used to move inventory from place to place and are “never destined to land on someone’s doorstep.”

Business owners are already anticipating a major disruption if the company stops shipping, Esper said, and are implementing strategies like warning customers of looming delays, bundling shipments and turning to third-party shippers and FedEx, the second-largest private package carrier, at increased costs.

Even if businesses find someone else to ship packages, many work under contract with delivery companies and last-minute switching to standard published rates could drive up costs dramatically, Esper said, and there’s a chance those costs get passed onto the consumer.

Source : Forbes