Shippers Brace for UPS Strike

Consumers, businesses and rival shipping companies braced for chaos on Thursday as a possible strike against United Parcel Service of America Inc., set to begin this morning, threatened to severely disrupt package deliveries nationwide.

Hours before the 12:01 a.m. PDT strike deadline, the nation’s largest shipping company and representatives of its largest union met with a federal mediator to find a solution to the impasse, and the White House said it was monitoring the talks closely.

But administration sources said President Clinton did not plan to immediately step into the dispute if a strike began this morning, as he did in February when he effectively ended a pilots’ strike against American Airlines only minutes after it began.

Some companies scrambled to make contingency plans and reassure their customers amid the threat by the International Brotherhood of Teamsters, the union representing about 55% of UPS’ worldwide work force of 338,000, to strike if talks proved fruitless.

But customers’ options were limited because Atlanta-based UPS dominates the package-shipment industry, handling nearly 12 million parcels a day, or roughly 70% of the nation’s total. Even if they wanted to, UPS’ competitors couldn’t possibly pick up all of UPS’ business if a strike occurred.

“It’s just too much volume,” said Roy Liljebeck, spokesman for Airborne Freight Corp., which said it would accept extra packages only from its existing customers in the event of a strike.

Other delivery services, such as Pittsburgh-based RPS Inc., likewise said it won’t take new customers or are limiting the number of packages each client can ship because it simply doesn’t have the capacity.

“We have decided to protect our existing customer base,” said Kurt Chase, an RPS account account executive in Los Angeles.

Indeed, “this is one of the few threatened strikes where even the potential beneficiaries [UPS’ rivals] are hoping there’s no strike,” said Brian Routledge, a transportation analyst at Prudential Securities Inc.

UPS spokeswoman Kristi Wolfgang declined to outline UPS plans if a strike occurs, except to say “contingency plans are in place.” UPS managers presumably would step in to handle as many shipments as possible.

Regardless, UPS customers were forced to seek other couriers and to calm their own customers’ fears of late deliveries. Fears of a possible strike had already resulted in a significant loss in revenue for UPS.

“If the strike takes place, we’ll switch to the U.S. Postal Service,” said Michael Beard, manager of Raven Maps & Images, a Medford, Ore., firm that sells geographic wall maps via catalog. “But anything we’ve shipped in the last couple of days potentially could be sitting in a [UPS] truck somewhere for a while.”

Lands’ End, the Dodgeville, Wis.-based apparel concern, has warned customers of delays because it ships most of its goods via UPS. A strike “would have a huge impact” on its operations, said spokeswoman Charlotte LaComb.

Boyds Wheels Inc., a Stanton, Calif., maker of custom auto wheels that also mostly relies on UPS, hadn’t yet made other arrangements but was telling customers about the possibility that their products would arrive late, said shipping manager David Hancock.

A strike also could hurt the railroad industry, which counts on UPS for 10% of its total “intermodal” shipments--that is, shipments in containers that are carried first on railroad cars and then by truck, according to Salomon Bros. analyst James Valentine. But other truckers could get a boost, he said.

The Teamsters--which are seeking more full-time job opportunities, better pensions and limits on outside subcontracting by UPS--rejected the company’s “last, best and final” offer Thursday, when their previous four-year contract expired.

UPS, which moves more than 3 billion packages annually, said its offer for a new five-year pact would keep its union members “the highest paid workers in the industry.”

UPS, known as “Big Brown” for its familiar brown trucks and worker uniforms, earned a $1.2-billion profit last year on revenue of $22.4 billion--making it twice again as large as its nearest rival, Federal Express Corp.

Founded 90 years ago by failed gold prospector James E. Casey, UPS today operates more than 156,000 trucks and 500 aircraft, and has about 1.4 million customers that rely on the firm for daily pickup service.

UPS is mostly owned by its managers and other employees, and it’s renowned for demanding a strict work ethic from its employees in exchange for full-time driver salaries that average between $40,000 and $50,000 a year and benefits that include profit-sharing. Yet 57% of UPS’ employees work part-time, and earn an average of more than $11 an hour, according to the company.

UPS also has never been hit with a nationwide strike despite its workers’ long-time representation by the Teamsters.

But with Federal Express and others nipping at its heels, UPS--despite being a model of corporate efficiency, and doubling its annual profit since 1992--has implemented new tactics in recent years to boost its productivity.

Those changes, such as doubling the weight limit for packages its workers carry and requiring workers to carry more parcels, have run into heavy resistance among UPS employees.

The UPS dispute also comes as the Teamsters leadership is embroiled in a union election controversy and amid continuing deep divisions in the union’s rank and file.

Among other problems facing the union’s officials, a federal grand jury is looking into allegations of corruption in connection with the reelection of Teamsters President Ron Carey in December. Carey narrowly defeated challenger James P. Hoffa, son of labor legend Jimmy Hoffa, in a battle that reflected the split within the union.

The division between pro-Carey and anti-Carey forces badly undermined the Teamsters’ brief walkout against UPS in 1994. The strike was endorsed by Carey but opposed by his critics, and only an estimated 20% of UPS employees represented by the Teamsters stayed off the job.

This time, however, Teamster officials said they will be able to put aside their differences to focus on pressuring UPS for a better contract.

Times correspondent Melinda Fulmer in Orange County and Times wire services contributed to this story.