Hard times for logistics and transportation companies...

Filed in archive General on June 11, 2009

The economic downturn has given the logistics and transportation a hard time. To give some examples of the reasons:

- As people are buying less, there are less requests to transport products to retail stores.
- Manufacturing sector, especially parts and component manufacturers see a dramatic decrease in their sales and this affects their large logistics chain.
- The predicted growth haven't materialized so some logistics firms have ended up with extra resources.

So, like many other sectors, these companies have started cost reduction programs. UPS, for example, announced last week a new agreement with its Pilots Union to a joint cost reduction effort to achieve $131 million in savings till 2011.

UPS officials said that through a series of voluntary steps, the IPA (Independent Pilots Association) has identified nearly $90 million in savings to date. Even though this falls short of the three-year $131 million goal, UPS and the IPA said there will not be any pilot furloughs through April 1, 2010, adding that the IPA is working on producing additional savings.

A UPS statement indicated that voluntary pilot savings generated later this year could potentially eliminate any proposed layoffs. And it added that savings identified by the IPA have been produced through voluntary programs, including: pilots taking short- and long-term leaves of absence; military leaves; job-sharing; reductions in flight-pay guarantees; early retirement; and sick bank contributions.

Even though UPS needs much more initiatives to survive such periods, joint efforts with union organizations seem like good starting points as they result in savings and don't destroy morale as much.