Running on Ice: Staying cool during possible UPS strike

Hello, and welcome to the coolest community in freight! Here you’ll find the latest information on warehouse news, tech developments and all things reefer madness-related. I’m your controller of the thermostat, Mary O’Connell. Thanks for having me!

All thawed out

(Photo: Jim Allen/FreightWaves)

Yellow and UPS have been battling it out in the headlines as far as which company will cause supply chain upheavals first. Yellow stands to run into the biggest issues first, with the Teamsters threatening to strike Monday if pensions aren’t paid. The good news is that the temperature-controlled supply chain stands to bounce back faster than dry van should Yellow file for bankruptcy as it doesn’t do any temperature-controlled moves. The best it can do is “protect from freeze.”

That being said, should Yellow fold, there is still going to be a temporary capacity crunch as other LTL carriers work to accommodate the influx of capacity. 

The UPS situation is infinitely trickier. The Teamsters and UPS have taken a break from the negotiating table as company management and the union struggle to come to an agreement on improvements for workers. If all 340,000 workers walk out, it stands to be the largest strike against a single employer in U.S. history, according to NPR.

This is where the problems come in. UPS has a comprehensive cold chain program, specifically geared toward health care logistics. There are 15.6 million packages and documents delivered daily for the health care supply chain and with 1,800 facilities across 200 countries, there is a global supply chain that gets brought to its knees should the Teamsters strike. Reuters has said that should UPS go on strike, the U.S. economy alone will take a $7 billion hit. 

So what does that mean for cold chain shippers? Definitely find alternatives for shipments for the time being. Unfortunately, UPS’ volumes are more than FedEx, DHL and the U.S. Postal Service can absorb, so the more proactive you can be the better. Don’t wait until July 31 to reach out to backup carriers. If contingency plans aren’t in the works, it’s well past time to get one started. 

We can expect to see some of the traditional LTL moves shift to truckload carriers in an effort to free up linehaul space for carriers absorbing some of the excess capacity. Ultimately, delivery times stand to be affected. One- and two-day shipping will be harder to come by in certain markets. It’s not the end of the world, but it is important to plan for extra transit time in packages, whether that means additional ice packs, dry ice, temperature sensors, etc. Visibility and tracking tools will be absolutely crucial to ensure shipment integrity in an environment that will be prone to delays. 

Something of note that FreightWaves CEO Criag Fuller brought up in the last State of Freight is: “If there’s a UPS strike, OTRI will accelerate across the board. Tender rejections will rise and companies will be forced to “pay up” for capacity, he predicted. The ballpark is going to be electric.” 

Shippers that use full truckloads will need to be aware of increased transportation costs for the duration of the strike as well as the months that follow as networks try to rightsize themselves. 

 Food and drugs

(Photo: Jim Allen/FreightWaves)

The hallmark of every summer barbecue is burgers and hot dogs on the grill. Whether it is all-beef burgers or vegan and veggie burgers, no summer gathering is complete without the all-American burger. Let’s see how everyone’s favorite burger ingredients stack up against each other. 

According to a Foodmarket article, this is how various proteins have shaken out post-Fourth of July. Ground beef nationwide last week averaged $5.67 discounted, with the leanest options coming in upward of $7 or more. Despite the elevated price per pound compared to this time last year, ground beef sales totaling $75.8 million last week, indicating that grilling season cannot be stopped. 

If ground beef isn’t your style, fresh ground turkey averaged $5.19 discounted, which is up 7% from this time last year. Turkey sales were more than $15.3 million. Pescetarians can’t be left off the grill as fresh salmon averaged $11.68 discounted, which is actually lower than this time last year. Regardless of what you want the burger to be made from, protein sales don’t show any signs of stopping anytime soon.

Cold chain lanes

This week’s market is one of the largest in the U.S., Ontario, California. Reefer outbound tender rejections have dropped 357 basis points week over week. Now that ROTRI is at 5.43%, shippers should expect to see stronger contract compliance from carriers as they are accepting almost 95% of shipments tendered to them. Capacity is loosening in Ontario so expect spot rates to reflect those levels of the beginning of the month. 

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Source: freightwaves - Running on Ice: Staying cool during possible UPS strike
Editor: Mary O'Connell