UPS shippers should already be exploring ways to limit their exposure to a potential strike from the International Brotherhood of Teamsters in 2028, parcel shipping experts told Supply Chain Dive.

The delivery giant has about 300,000 Teamsters-represented employees in its ranks, including drivers and package handlers. The current national contract between UPS and the Teamsters — which was ratified in 2023 following a tense negotiations period — lasts through July 31, 2028.

Threatened strikes during the last round of negotiations failed to materialize, and with the current deal's expiration date well over a year away, a work stoppage isn't imminent. However, shippers still should consider the strike risk before signing an agreement with UPS and make sure they have a contingency plan in place, experts said.

Deals shippers sign today with UPS, which usually last about three years, will outlive the current UPS-Teamsters labor contract, Kenneth Moyer, partner and chief supply chain officer — strategic advisory at LJM, said in an interview with Supply Chain Dive. 

In 2023, many shippers proactively diverted packages to FedEx, the U.S. Postal Service and other carriers to limit their exposure to potential labor-related disruptions. But language in UPS shipping contracts could complicate such a shift for some customers. Early termination penalties have become more common, meaning customers could be hit with a fee if they attempt to exit agreements or move packages covered by the contract to other carriers, Moyer added. 

"For example, if you sign an agreement with UPS today and it comes up to the end of the Teamsters contract, and you want to seek a safety valve with FedEx contractually, you may be exposing yourself to a penalty," Moyer said.

UPS is already locking in deals with several shippers that extend well beyond 2028, CEO Carol Tomé said on a July 28 earnings call. She said the trust UPS has built with customers and the carrier's confidence in managing through contract negotiations "gives us the ability to continue to drive our business.”

Teamsters to go on “offense” in looming UPS campaign

Teamsters General President Sean O'Brien is already signaling what the union wants in the next contract negotiation with UPS. He is pushing for the Teamsters to hold UPS accountable for all members, including part-time employees, according to a union LinkedIn post. 

Differences over part-time employee wages stalled talks during the last contract negotiation before an agreement was eventually reached to boost their pay.

"The part-timers who load those trucks and keep UPS running deserve a fair share of the company’s success," O'Brien said in the post. "In the fight ahead, we cannot be reactive. We must be on the offense for the next two years."

Priorities for Teamsters-represented UPS employees include addressing the use of non-union gig workers at subsidiary Roadie, combating excessive overtime, and improving pension and health benefits, per the Teamsters for a Democratic Union, an independent organization for union members.

"UPS Teamsters are looking ahead to the most important contract fight in a generation," the organization said. "The company is on the attack. UPS is dumping volume, closing buildings and laying off Teamsters."

UPS has cut tens of thousands of jobs and shuttered several facilities since last year as the company adjusts its network to fewer packages from Amazon. The company has also navigated a handful of dustups with the Teamsters since the current labor contract's ratification.

For example, the union threatened a 2023 peak season strike due to layoffs — which were quickly reversed — at the company's Louisville, Kentucky, hub. The Teamsters also attempted to block a round of UPS driver buyouts earlier this year with a lawsuit, but a judge rejected the union's argument and allowed the buyouts to move forward. The two sides eventually reached an agreement to limit the scope of the program.

While Teamsters-represented UPS employees have voiced various concerns, Tomé said in an earnings call last month that the carrier is well-positioned for the next round of contract talks.

"Except for our founder, Jim Casey, I believe I will be the only CEO who has negotiated two Teamsters contracts," she said. "And from that, I think it gives me a distinct advantage because there are many lessons learned from the 2023 contract negotiation.”

Experts offer tips for UPS-reliant shippers

As the two sides gear up for a contract battle, LJM's Moyer is advising UPS-heavy clients to ensure their technology systems can support other carriers so they can more smoothly shift volume elsewhere if needed. 

"At least prepare the operations so that the skeletal structure is there, [so] that if you had to introduce somebody else for a time, you at least could," Moyer said, noting many shippers have been using UPS for so long they are unable to produce a shipping label for another carrier.

UPS shippers also shouldn't wait too long to establish relationships with other carriers if they're concerned about a possible strike, Joe Wilkinson, VP of professional services at Intelligent Audit, said in an interview with Supply Chain Dive. It will be difficult to secure capacity with FedEx in particular if shippers attempt to shift volume mere months before the Teamsters contract expiration date, he added.

"Trust me, they're going to be selective, and you're going to pay," Wilkinson said of FedEx.

A carrier limiting the amount of new volume into their network due to a strike at another carrier is nothing new. For example, during the 2024 peak season strike by Canada Post employees, carriers like FedEx and Purolator instituted shipping limitations as they navigated heightened demand.

Beyond leveraging other carriers, UPS customers can attempt to iron out language in their shipping agreements to limit their exposure to strike-related risks. Multiple shippers working with logistics data platform Loop have secured clauses within their UPS agreements that protect against "extenuating circumstances," Matt Sumowski, head of GTM, parcel intelligence at Loop, said in an email. Although these clauses don't explicitly mention a Teamsters strike, they do open the door for negotiations with UPS over contractual obligations in the event of disruptions outside of the shipper's control, he added.

"How protected a shipper is against the strike via their contract comes down to their leverage and knowing what to ask for, so there are many different flavors of what shippers are getting," Sumowski said.