Survey: Shippers Prepare for Possible UPS Strike

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July is a long way away, but not for businesses that went through the last United Parcel Service strike in 1997.

More than half of surveyed UPS customers plan to divert business to other carriers in the event of a strike at the company this summer, according to a survey of 200 UPS customers this month by Morgan Stanley Dean Witter & Co. and Transportation & Distribution magazine. The largest customers in the survey said they would consider shifting to another company an average of 5.3 months in advance of the contract deadline, or in February.

UPS and the Teamsters union, which represents 230,000 company employees, will exchange initial contract proposals Jan. 30, about a month earlier than in the previous round of talks in 1997. Those negotiations ended with a 15-day strike that cost United Parcel $350 million in lost profit. The current UPS contract with the Teamsters expires July 31.

Sixty-two percent of surveyed customers said they may divert up to about three-fifths of spending on shipments to rivals that could ensure delivery if no accord is reached. Of those, 90 percent likely would shift to FedEx, with the rest split between Airborne Inc. and the U.S. Postal Service.

The survey also said that customers who switch may take longer to return to UPS than in the 1997 strike, partly because FedEx has further developed its ground delivery system. In addition, the company may lose 5 percent to 10 percent of daily U.S. ground shipments, the survey said.

A UPS spokesman called the survey pure speculation. In addition, analysts said the odds of a strike were very low.

In a statement earlier this month, UPS said it was pleased to get an early start on contract talks and is optimistic about them.

"We know our employees and customers want to see a new agreement negotiated as soon as practical," said Chris Mahoney, senior vice president for transportation. "The Teamsters have said they recognize an early start to negotiations is the best way to protect UPS volume and preserve Teamsters jobs. We are very optimistic we can successfully negotiate a contract that rewards our employees while maintaining our flexibility to compete."

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