Shippers using UPS are reviewing their options for the busiest time of the year as the spectre of potential service disruptions from industrial action at the logistics giant moved a step closer to reality after its pilots overwhelmingly voted in favour of authorizing their labour union to call a strike.
The vote marks the culmination of a lengthy contract dispute between the integrator and its pilots that has been running since 2011. According to the Independent Pilots Association (IPA), which represents the company’s flight crews, there is disagreement on several aspects. The union pointed to working hours as the main obstacle, but the two sides are also at loggerheads over healthcare and retirement benefits as well as pay. The IPA wants longer rest periods between flights, bringing pilots’ working conditions closer to the regime that governs pilots who fly for commercial passenger airlines.
US legislation introduced in 2013 on pilots of passenger planes mandates a minimum 10-hour break between flights and reduced their maximum work day from previously 16 to 14 hours. Cargo carriers are exempted from these rules, as operators had successfully argued that they would be disproportionately hard hit, as much of the flying of cargo aircraft occurs at night.
In the event of an escalation of the labour dispute the pilots would have the backing of other UPS employees. The Teamsters union, which represents the majority of the company’s work force, has declared its support for such action. “If a strike is necessary, we will not cross your lines, but will stand with you on them,” Teamsters leaders stated in a letter to the IPA.
The recent vote did not trigger off a strike but makes the possibility more likely. It authorizes the union to seek withdrawal from mediation in the contract negotiations and call a strike when it sees fit.
Still, the mandate causes concern among shippers about possible service issues during the busy peak period and has prompted them to review their strategy and back-up plans, some pundits have warned. This would be painful for UPS, which struggled in the past two years to align resources with traffic volumes. After delivery problems caused by unexpectedly high traffic in 2013, last year management went overboard in its preparations, one analyst noted.
UPS is expecting record volumes in the weeks before the end of the year. In early November management signalled that it was expecting to deliver more than 630 million packages between “Black Friday” (November 27 this year, the day after the Thanksgiving Day holiday in the United States) and New Year’s Eve, which would mean an increase of over than 10% over 2014.
“Consumer preference for online commerce is driving tremendous growth for UPS,” said Alan Gershenhorn, executive vice president and chief commercial officer.
The company’s main rival is equally bullish on the peak. FedEx top brass predicted it would handle 317 million packages globally in the same period, which would be 12.4% higher than last year. It is going to add over 55,000 positions for the period to cope with the anticipated surge. UPS is taking on over 90,000 drivers, handlers and support staff.
FedEx top brass also base their forecasts on the rampant growth in e-commerce. “The shift in consumer shopping patterns, fuelled by the rise of e-commerce, continues to drive our volume.” said FedEx chairman, president and CEO Fred Smith.
Unlike UPS, FedEx is no longer troubled by possible unrest from its pilots. Like UPS, it started its latest round of contract negotiations with its pilot union back in 2011, but FedEx reached an agreement two months ago, which was recently ratified by the union.
Some observers reckon that the pay rise that FedEx pilots achieved in their agreement is fuelling discontent at UPS pilots.
By Ian Putzger
Air Freight Correspondent | Toronto
