A UPS strike was averted on the last day of the quarter, but it still hangs in the balance as the two sides are not on the same page! A potential UPS strike could have significant negative impacts on the supply chain and customer service. The head of the union said an imminent strike was likely when a counterproposal fell flat. Now that a new counterproposal was submitted, the imminent strike was called off with a new date set within a wee
The West Coast ports have been negotiating with the unions for months with no agreement in place. Recently they came to a tentative agreement after rising tensions resulting in delays in vessel servicing, congestion at the ports etc. A widespread strike along the West Coast could cost $1 billion a day! This agreement will take months to ratify. Unfortunately, details are scarce as to what is in the agreement and how that will impact competitiveness of the ports.
The threat of a port strike in Canada remains high. They voted in a landslide to authorize a strike. Vancouver and Price Rupert ports were seen as relief valves for shippers during the West Coast negotiations. Trade issues have been exacerbated since the Panama Canal has struggled due to low water levels which limits the weight of vessels in the canal.
This follows the rail strike that was averted at the last minute by Congress. A rail strike could result in $2 billion a day in lost economic output.
A UPS Strike’s Supply Chain Impacts
Clearly, the economic impact is substantial at $1 billion a day for UPS! This doesn’t even tackle the hoards of supply chain issues caused by strikes of the transportation / goods movement systems. A few of the HUGE impacts include:
- Lack of deliveries of raw materials, components & supplies: This can bring production to a halt. Best case, schedules are changed, materials are expedited and supply chain chaos follows.
- Shipments delayed: In today’s complex supply chain, if one node stops or slows down, the entire end-to-end supply chain is impacted. For example, there can be several manufacturers, suppliers, distributors, transportation partners, and customers negatively impacted and scrambling.
- Customer & consumers negatively impacted: Delays throughout the system similar to the pandemic could result.
- Critical supplies impacted: Beyond nice-to-have purchases, supplies impacting healthcare, national security and food will be impacted.
Listen to my interview on FOX5 about the potential UPS strike.
What to Do?
The answer is not to rely on hope!
Instead, you should follow a few uncommon common sense best practices to mitigate the supply chain impacts:
- Backup partners: Ensure you have backup suppliers/ transportation partners. Remember, you cannot have a backup supplier in name only. To be successful, you must be working with your backup suppliers on a continual basis and giving them at least 20% of your volume.
- Backup modes of transportation: Instead of air freight, you should be reviewing backup modes of transportation. This won’t make sense for piece shipping (e-commerce) although you should explore and be aware of your options.
- Reevaluate your supply chain network: It is time to take a fresh look at your complete supply chain network, simply due to the exacerbated risk factors in the global supply chain. Make short term tweaks and build a resilient supply chain for your long-term competitive success. There are countless ways you can mitigate these types of risks while creating a resilient network.
- Be a partner of choice: Simply looking at price will no longer cut it. It never did but companies were able to get by. You must find collaborative win-win relationships to succeed in the modern supply chain.
Please contact us with stories, issues, and opportunities on what you’re doing to free up the mind and create a culture of innovation. And, please keep us in the loop of your situation and how we can help your organization get in a position to thrive for years to come. Learn more about these topics in our blog and download your complimentary copy of our recently released special report: The Road Ahead: Business, Supply Chain & The World Order.
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