36 DC VELOCITY JUNE 2018 www.dcvelocity.com
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UPS nor the Teamsters would comment on the status of negotiations.
With the talks heating up, one
huge question looms: How far will
UPS push the envelope to compete
in a new world of parcel delivery,
and how far will the Teamsters be
willing to bend? In decades past,
UPS has been able to convince the
Teamsters that new services would
mean more packages and more
union jobs. That might be a harder
sell this time around. UPS views
autonomous vehicles, drones, and
robotics as the necessary tools of 21st
century logistics. The Teamsters, on
the other hand, perceive such changes as
threats to their jobs.
The union sees a crowded field of newcomers—many with different ideas about
logistics than those who’ve come before
them—vying to take packages from UPS
and, by extension, food off Teamster
tables. It has seen the growth of e-commerce—expected to reach 17 to 20 percent of U.S. retail sales by 2022 from
about 12 percent today—further shift
UPS’s business mix from the higher-mar-gin business-to-business traffic that the
company has long dominated to the busi-ness-to-consumer segment that is more
competitive and not nearly so profitable.
The Teamsters have watched as more
final-mile deliveries have been siphoned
to the U.S. Postal Service (USPS), whose
universal service network is used by UPS
to deliver parcels to remote locales where
it would be cost-prohibitive for the company to send its trucks and drivers.
The Teamsters have tried unsuccessfully to negotiate the demise of the service,
known at UPS as “SurePost,” and will
likely continue to push for its closure.
UPS, for its part, has developed a low-cost pricing matrix for ultra-short-haul
deliveries that’s designed to divert parcels
from the Postal Service to its own network. But it is believed the company is
not moving fast enough to implement the
initiative.
SLEEPLESS ABOUT SEATTLE
Then there is Amazon. A relative non-fac-tor in logistics in 2013, the Seattle-based
e-tailer has since spent billions of dollars
on planes, tractor-trailers, hubs, and fulfillment and distribution centers. From
starting out just shipping orders placed
on its website, Amazon has expanded
into third-party fulfillment, which today
accounts for about 45 percent of the
company’s total revenue. Through its
new “Shipping with Amazon” service,
it is now trying to lure non-customer
merchants into its fulfillment network by
offering low-cost deliveries.
Amazon remains a heavy UPS user
because it can’t manage its burgeoning
volumes on its own. However, every
merchant that signs up for Amazon’s
fulfillment services means one less busi-
