Every time the United Parcel Service/Teamster labor contract comes due for renewal, the memories come rushing back, and I laugh to myself. Not because those two organizations have to square off again (although the thought of that is entertaining in itself) but because it brings back old memories from my days of working at RPS (now FedEx Ground).
While at FedEx Ground, one of my departments was responsible for creating the companys contingency plan just in case UPS loyal workers did, indeed, decide to strike. It was a thorough plan, but it was constrained by a very simple fact FedEx Ground didnt have a snowballs chance of absorbing even a small fraction of the possible volume that could be diverted from UPS. Everyone in the company knew it and acknowledged it; nevertheless, the planning continued in rigorous fashion and painstaking detail.
Since the independent contractors who picked up and delivered FedEx Ground packages were already operating at close to their daily capacity, there wasnt much hope of servicing more volume unless additional drivers were contracted. But who in their right mind would assume the risk of becoming a contractor with the uncertainty in the marketplace? So that wasnt much of an option! Likewise, the Achilles heal of FedEx Grounds network is its limitation in hub capacity. Although FedEx Ground gained a productivity advantage by equipping its hubs with automated sortation systems, system capacity could not be quickly increased, like UPS manually operated hubs, by simply adding package handlers. So, the ability to service a significant amount of additional packages was out of the question.
Even so, the package capacity of each operating facility was calculated based on its sortation and pick-up and delivery capacity. This theoretical capacity was compared to actual packages serviced, and the amount of new package volume that could be handled was determined. So package quotas were established and provided to all facilities around the country, and each terminal manager was provided strict instructions: Anyone whose daily package volume exceeds their quota would have the option of either facing a firing squad or death by boogie woogie! As Im sure youll agree, neither option was particularly appealing.
The last thing a carrier wants to do is disappoint its customers or turn away potential customers. A real dilemma exists when thousands of sales representatives, who spend their waking hours either entertaining existing customers or courting new ones, are told they cannot under any circumstance secure new business. The last thing a salesperson wants to do is inform prospects there is no way their packages can be serviced, especially when they are begging! Now, factor in that salespersons are compensated, in part, by the amount of business they generate. You get the picture. Arent these labor negotiations fun?
Another dynamic that occurs simultaneously on the shipping side is trying to find a way to get packages delivered. In reality, all other carriers combined cannot absorb the daily volume serviced by UPS. But I can picture shipping managers throughout the country, as the threat of strike is imminent, telling their bosses that they have all the bases covered. The conversation goes something like this, Yessir, I have talked to all the available carriers, and Ive been assured that there is available capacity for our packages if the need arises. I told them that if they ever have a hope of sniffing our business, then they better come through for us! Dont you worry, sir. Ive got it all covered. And the boss responds, Youd better, Johnson or youll be operating a forklift next week! Despite the false hope provided by a carrier rep or a shipping manager, a UPS strike is crippling to shippers and carriers alike.
As July approaches, we remember all too well the last time a strike occurred and its crippling impact on commerce. To be sure, untold hours will be spent throughout the parcel shipping industry preparing for the impossible. But thats okay. Take it in stride. And lets hope a strike is avoided. But in the end, well have more memories and maybe a laugh or two!
Joe Loughran is president of SmartTran, Inc. SmartTran is a transportation consulting company offering services in carrier rate negotiation, guarantee refund service and logistics planning. SmartTrans management team has over 60 years of experience in parcel transportation management. Joe can be reached by phone at 724-934-0626 or by e-mail at loughran@smarttran.com.
