UPS, the Teamsters, and What Shippers Need to Know Right Now

If this situation feels familiar, it’s because it is.

Back in January, UPS held its earnings call and set off a chain of events that has now escalated into a legal dispute with the Teamsters. There isn’t a strike happening today, but the tone and tension feel a lot like the summer of 2023, when uncertainty alone was enough to push a significant amount of volume out of the UPS network.

And when that kind of uncertainty creeps in, shippers feel it first.

At Redwood, we work with shippers through moments exactly like this. When labor strategy, network changes, and carrier economics all collide, one thing becomes clear: shippers need visibility, flexibility, and leverage.

Where This Started: UPS’s January Earnings Call

During its January earnings call, UPS leadership was direct about where the company is headed. The message was straightforward: UPS is intentionally shrinking areas of its network to improve profitability.

From an investor perspective, it was positioned as a disciplined reset. The company announced plans to cut up to 30,000 jobs in 2026, close 24 facilities, and continue moving away from millions of lower-margin deliveries—especially volume tied to Amazon. This strategy began in 2025 when UPS cut 48,000 operational and management roles. UPS is prioritizing higher-yield shipments, healthcare logistics, and more profitable customer segments.

Fewer packages. Better margins. Stronger returns.

But operationally, a smaller network means something very specific: fewer drivers and less labor. And that’s where the tension begins.

Why the Teamsters Are Pushing Back

UPS employs more Teamsters-represented workers than any other company in the United States. The two sides negotiated a national contract in 2023 that avoided a strike and delivered meaningful wage increases and job protections.

Fast forward to today, and UPS is working to align its workforce with a leaner network. Rather than relying primarily on traditional layoffs, the company has leaned into buyout programs. The latest proposal—referred to as the “Driver Choice Program”—reportedly offers drivers a lump-sum payment in exchange for permanently leaving UPS and agreeing not to return.

The Teamsters argue that the scope of this buyout goes beyond prior programs, required documentation hasn’t been provided, and that the move may violate the National Master Agreement. They see it as a way to reduce union jobs more quickly than the contract allows. UPS maintains that it is acting within its rights and that the lawsuit will not disrupt operations.

How the legal process plays out remains to be seen. But for shippers, the existence of tension itself is what matters most.

Why This Matters — Even Without a Strike

Shippers don’t need an actual strike to experience disruption. As we saw in 2023, uncertainty alone can change behavior.

During the last round of contract negotiations, many shippers proactively shifted volume away from UPS to avoid potential service interruptions. UPS lost meaningful volume during that period, and not all of it returned. The lesson was simple: when risk rises, shippers diversify first and sort out the details later.

Today’s situation is different, but the emotional memory is still there. Headlines about lawsuits, job cuts, and network contraction raise red flags for anyone who depends on consistent, reliable parcel service.

A leaner network also brings practical considerations. As UPS reduces headcount and facilities, certain lanes or service levels could feel tighter. Residential-heavy routes or small and midsize business segments may feel pressure first. Peak season flexibility could narrow. Premium services may become more selective or more expensive. Even if UPS executes this transition well, a smaller network leaves less room for error.

There’s also the pricing dynamic to consider. UPS has been clear that it’s walking away from low-margin freight. For shippers with limited negotiation leverage, that could mean pricing pressure or closer scrutiny of volume commitments and incentive-heavy contracts. And if volume shifts to alternative carriers, those providers may gain pricing power as well.

Naturally, many shippers will respond the same way they did in 2023—by diversifying. That might mean increasing FedEx or USPS volume, adding regional carriers, or experimenting with zone-skipping and hybrid delivery models. Diversification builds resilience, but it also adds complexity if it’s not managed strategically.

What Shippers Should Be Thinking About Now

This isn’t a moment for panic. But it is a moment for preparation.

Now is the time to evaluate whether your UPS rates are still aligned with the market. It’s worth assessing how exposed your operation would be if capacity tightens and whether you already have viable alternatives under contract. And just as important: can you pivot quickly if service levels change?

These are much easier questions to answer before disruption hits—not in the middle of it.

How Redwood Helps Shippers Stay Ahead

Carrier dynamics are shifting quickly, and labor strategy, network design, and pricing are more interconnected than ever. Staying informed isn’t enough. Shippers need a strategy that accounts for multiple possible outcomes.

By partnering with Redwood, shippers gain insight into carrier network and labor developments, ensure parcel contracts reflect real market conditions, and determine when diversification makes sense—and when it doesn’t. Just as importantly, we help execute multi-carrier strategies without creating operational chaos.

UPS remains a critical carrier for many shippers. But parcel strategy today isn’t just about loyalty. It’s about leverage, flexibility, and foresight.

The shippers who navigate this moment best won’t be reacting to headlines.

They’ll be prepared for whatever comes next.

Connect with Redwood for a parcel strategy review to ensure your network, contracts, and carrier mix are ready for whatever comes next.