The US economy cannot run without UPS. That is why a strike will be detrimental.

 The US economy cannot run without UPS. That is why a strike will be detrimental.

CNN New York — 

UPS is more than just a major freight firm. Its trucks transport 6% of America's gross domestic output. It also plays an important role in the seamless movement of products on which the economy depends, feeding supply networks that are just now recovering from interruptions that drove up costs in previous years.

That is why contract negotiations between UPS and the Teamsters union are so important. In the absence of an agreement, 340,000 Teamsters are ready to go on strike at the nation's largest trucking company on August 1.

"This strike poses a serious threat to the US economy," said Patrick Anderson, president of the Anderson Economic Group, a Michigan research tank specializing in the economic repercussions of strikes. "The sheer number of people affected and the breadth of the impact across the country is very serious." And the extent to which the US economy has become reliant on quick delivery of tiny things that can be handled by UPS has yet to be tested."

UPS (UPS) has had a very excellent financial year since the start of the epidemic, with a record adjusted operating profit of $13.9 billion last year, up from $7.4 billion in 2018, the year the last contract was negotiated.

It is also now available six days a week. It had 443,000 US employees at the end of last year, up 69,000 from the previous contract negotiations five years ago.

However, the years following the pandemic have been a sharp reminder of what happens to the US economy when supply chains do not run as smoothly as expected, when issues at US ports and a scarcity of truck drivers and shipping containers prompted delays and increased prices for many items.

A UPS strike may cause similar problems across much of the country.