The Shipping and Delivery Picture Gets More Complicated… and More Expensive

No matter how you transport your goods, it’s likely to get more expensive – and you may need to switch the companies you work with – following the new UPS contract and the demise of Yellow Trucking.

The down-to-the-wire settlement of a new contract for 340,000 United Parcel Service workers last month averted what could have been a massive disruption in delivery service across the country but it no doubt comes with a price for companies that use UPS.

The agreement, according to a Reuters report, is estimated to be at $30 billion by the union, providing what the union describes as “historic” wage increases as well as one more paid holiday and, particularly relevant in this summer of record heat, air conditioning in the company’s well-known brown delivery trucks. UPS has not said what the new contract will mean for its rates but with new overtime rules and the elimination of the existing two-tier pay structure, it will most probably result in higher shipping costs.

Still, a settlement would appear to be preferable to the situation in 1997 when a 15-day UPS workers’ strike cost shippers an estimated $4 billion and cost the company $850 million in lost revenues, according to Reuters.

The outcome for Yellow Corp. is much less positive with the national trucking company, which moved $5 billion in goods last year, announcing it was shutting down completely. The company filed for bankruptcy on Monday, August 7. Press reports have suggested Yellow customers were already shifting their cargo to other carriers although as the third largest trucker in the country with 17.5 million annual shipments there seemed certain to be logjams in the nation’s freight system as it absorbed this redirected capacity.

Both of these developments come only weeks after dockworkers at ports up and down the West Coast approved a new contract that the Washington Post estimated would result in 8 – 10% hikes in costs at ports in California and Washington State. Taken all together it appears that any company trying to move its goods from Point A to Point B is going to be paying more for the privilege very soon.

BACK TO NEWS