UPS Inc. and the International Brotherhood of Teamsters union resumed talks and reached a tentative agreement today, July 25, in a last-ditch effort to avoid a strike in which 340,000 workers had vowed to walk off the job at 12:01 a.m. ET on Tuesday, Aug. 1. The current contract expires on July 31, and the union still needs to vote to ratify the agreement on Thursday, Aug. 3.

Redwood’s Parcel Mediation team has seen the impacts for months as shippers have sought to diversify their parcel carriers and otherwise hedge against the effects of a strike that would almost instantly pull 25% of parcel capacity out of the market.

We’ve provided key updates, analysis and advice throughout the UPS/Teamsters negotiation roller coaster:

• Decipher the Parcel Market as Strike Risk Grows, Economy Softens – June 6
• Prepare Your Parcel Strategy for a Summer of Uncertainty – April 21
• How to Navigate the Parcel Market Amid a Potential Strike – March 10

Whether you’ve shifted strategies to protect against the potential strike or stayed the course in hopes of an agreement before the deadline, the question on everyone’s mind is the same…

With a Tentative UPS/Teamsters Agreement in Place, What Should Shippers Do Now?

FedEx had previously stated they needed capacity shift commitments by March 31 to ensure post-July coverage, but as volume and rates have dropped, parcel carriers are providing pricing concessions at the highest rate since 2019. DHL, USPS and other smaller and regional parcel carriers are being forced into similar moves, even if the sudden volume spike had taken place if a UPS strike happened. Parcel shippers have a surprising amount of leverage to extract savings.

In fact, Redwood’s most recent parcel contract mediations have resulted in savings of 19% and 22%.

In other words, if you haven’t analyzed your parcel contracts, both considering the UPS strike ripple effect and the market shift, you could be leaving money on the table.

The main sticking point in UPS/Teamsters negotiations was compensation for the over 100,000 part-time workers, and the new UPS offer raises pay for both full-time and part-time workers, which could lead to a shift in rates once again. A parcel mediation service can help make sure you don’t miss any opportunities … or subtle rate and surcharge updates, like UPS recently assessed…

Even Amid Strike Talks, UPS Publishes New Rate Surcharges

While most eyes have been on the strike risk, UPS and other parcel carriers are adjusting surcharges and accessorial fees, which can quickly inflate final parcel costs.

For example, effective July 9, 2023, three new surcharges will be replacing the Non-Machinable Charge previously assessed on UPS SurePost shipments. While UPS published these surcharges as far back as March, we now see our customers being assessed these fees for the first time. UPS SurePost shipments are also assessed fees for delivery & returns and delivery area.

Previously, a Non-Machinable Charge (NMC) of $4.20 was assessed on SurePost shipments if the package met one of these characteristics:

1. Any package with one dimension measuring more than 34 inches and not exceeding 48 inches
2. Any package with any two dimensions each measuring more than 17 inches and not exceeding 30 inches
3. Any package weighing over 35 lb.

Effective July 2^nd, 2023, there will be three surcharges:

• Non-Standard Cube Charge (NCB) – $15.00 per package

Any package with L x W x H measuring more than 2 cubic feet (3456 cubic inches).

• Non-Standard Extra Length Charge (NLN) – $5.00 per package

Any package with the longest side measuring more than 30 inches

• Non-Standard Length Charge (NLP) – $2.00 per package

Any package with the longest side measuring more than 22 inches and not exceeding 27 inches.

These rates and more can be viewed at: UPS SurePost Shipments

So, with rate repercussions from the tentative UPS/Teamsters agreement and market shift and new surcharges…

Now is the Perfect Time to Strengthen Your Parcel Strategy

Redwood’s Parcel Mediation team analyzes parcel contracts daily to uncover hidden savings opportunities for shippers like you. Whether the agreement gets ratified or not, seize the opportunity with the parcel market shakeup to get more out of your parcel strategy. Start with a no-cost parcel check-up.

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P.S. The threat of a strike has already created ripple effect across other modes as well, with LTL carriers seeing increased volumes (LTL carrier Yellow Corp. seems to have averted a Teamsters strike of its own, at least for now), and then Full Truckload impacts too. With Redwood’s full suite of modern 4PL services, we’re able to help you navigate any mode holistically within your broader transportation network. Ask your parcel expert how once you’ve seen how much you’ve saved with your parcel contracts.