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Striking Workers, Labor Unrest Continue to Impact Supply Chains

July 11, 2023 Kevin Baxter


While one high-profile freight-related labor dispute appears resolved, others with major supply chain implications are escalating as summer heats up. In a dispute that likely sounds pretty familiar, dock workers represented by the International Longshore and Warehouse Union (ILWU) have been involved in an ongoing contract dispute with those running West Coast ports. But in this case, the issue is occurring in Canada, affecting ports run by the British Columbia Maritime Employers Association (BCMEA) - and the dispute is 10 days into a strike.

The threat of a strike is on the table in another case of labor unrest, between UPS and the International Brotherhood of Teamsters as a contract deadline approaches at the end of July - with talks hitting a major snag as the month began. The scale of such a strike would make it one of the largest in U.S. history. The Teamsters are also involved in another conflict, this one with prominent LTL carrier Yellow, which has reportedly said it will run out of money soon without union concessions. Let's get into a bit more detail on each case.

Canada Port Strike Update

More than 7,000 ILWU dockworkers have been on strike since July 1, three months after the previous contract between the union and the BCMEA expired. The Canada port strike affects more than 30 west coast ports along the province of British Columbia. At issue, according to the union, are higher wages, as well as a need to protect members from what it calls the "erosion" of work threatened by automation and outside contract workers. The final straws though, were what the ILWU called "major concessions" demanded by management in spite of record profits they gained during the pandemic, as well as a particular disagreement over maintenance duties.

The group Canadian Manufacturers and Exporters estimates the strike is disrupting about $375 million in goods each day, which some worry could lead to supply chain disruptions that fuel inflation. ILWU Canada workers have the support of U.S. union membership as well, with California dock workers saying they won't handle any cargo bound for Canada if ships divert to American west coast ports. While negotiations broke off altogether last week, talks did resume Saturday - with federal mediators also involved. But no clear resolution is in sight, with some looking for government action to end the strike.

UPS Strike Update

Going from an actual strike to the threat of one, about 340,000 members of the Teamsters who work for UPS voted last month to authorize a strike if no deal is reached by a July 31 deadline. And prospects for a deal have dimmed as negotiations are at a standstill according to Teamsters leadership following a breakdown in talks last week. The breakdown was reportedly over part-time wages as the two sides had previously reached a tentative agreement on two-tier wages, overtime and holidays.

UPS says it transports around 6% of the U.S. gross domestic product - that translates to more than 18.5 million parcels each day in the first quarter this year. The company has contingency plans if a strike occurs, but some say businesses using UPS may turn to competitors like FedEx and the U.S. Postal Service (which just launched a new offering aimed at package transport). UPS has urged the union to continue negotiations. If no new deal is reached by the deadline, the Teamsters have said its members will walk off the job August 1 - affecting UPS services nationwide. So far, the White House has said it's "in touch with both parties" and optimistic for a "mutually beneficial agreement."

Yellow Freight News

In a different twist on the prior two stories, Teamsters in June told its 22,000 members that work for Yellow Corporation that the company would be out of cash by August. The company in turn sued the Teamsters alleging a breach of contract which has cost is more than $137 million in damages. Yellow says the union has blocked its plan to restructure and modernize its operations with no justification.

Without this restructuring, Yellow has said it may have to lay off all its workers and dissolve. Yellow is one of three unionized LTL carriers. The company has received a lifeline in the form of covenants with the U.S. Treasury and a lenders' group, but Yellow's position remains precarious. Yellow has asked the White House to push Teamsters to the negotiating table to discuss wages and modernization, but so far, the union has not appeared willing, citing previous concessions it's made to keep the company afloat.

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