United Parcel Service plans to switch from employee delivery drivers in the United Kingdom to using independent contractors that have their own vehicle fleets to deliver parcels, according to Unite, the UK's largest trade union, and a source close to the situation. The transition is scheduled to be completed by June 2027 and will result in the elimination of more than 3,000 jobs across 51 sites, reducing UPS's UK workforce from 4,000 to 800 people, Unite said in a June 12 news release.
Context: Cost Pressure and Labor Disputes
The news comes as the powerful Teamsters union in the United States claims that UPS (NYSE: UPS) is violating a collective bargaining agreement by steering parcel delivery to Roadie, a UPS-owned subsidiary that relies on gig workers. The US dispute raises questions about whether UPS will eventually try to replicate the nonunion UK model in the US as a way to reduce costs. UPS had net income of $5.57 billion in 2025, a 3.6% decline from the prior year.
Proposed Model: Contractor-Based Last-Mile Delivery
Unite suggested the new UPS driver pool will come from self-employed individuals picking delivery assignments through an app, similar to how an Uber driver functions. However, an industry source familiar with UPS’s thinking said the company actually envisions a model more like that of Amazon, which contracts with outside service providers responsible for managing fleets and hiring in their local delivery area. Some workers could be rehired by third-party contractors that UPS plans to partner with for last-mile deliveries, according to Unite. It’s also possible some third-party couriers could use independent gig workers to carry out deliveries.
The company is consulting with Unite and two smaller unions, the National Union of Rail, Maritime and Transport Workers and the United Road Transport Union, about the proposed changes and how they could be implemented. A UPS spokesperson said in an emailed statement: “We constantly review how we can enhance customer experience and improve efficiency in response to changing market demand. As a consequence, we are evaluating options for our business in the UK as we remain committed to providing the highest standard of service and value our customers expect across the UK.”
Union Response and Potential Strike
Unite General Secretary Sharon Graham condemned the plan: “The way UPS is treating its workers is disgusting. Unite has made it crystal clear that UPS’ plans are completely unacceptable and if it doesn’t reverse them then all avenues including industrial action will be actively pursued.” Unite said it is considering a strike to show its opposition.
US Parallel: Teamsters vs. Roadie
The Teamsters made it official policy last week to challenge UPS for allegedly diverting parcel deliveries to Roadie, which uses independent drivers. Under the 2023 contract, all parcels moving through the UPS network must be handled by Teamster workers. But Roadie and outside analysts say Roadie doesn’t touch traditional parcels that move through the UPS sorting system; instead, it provides same-day grocery and parcel delivery from retail stores to shopper residences, and delivers bulky items that don’t fit in UPS’s automated parcel sorting system. Parcel industry consultant Satish Jindel argued in a FreightWaves commentary last year that UPS needs to leverage Roadie’s less-expensive outside delivery agents for B2C deliveries, which are too costly with unionized drivers and large vans, to stem loss of market share and boost profitability.
Implications for Shippers and Logistics Operators
The shift to a contractor model in the UK could affect service reliability and network coverage during the transition period. Shippers relying on UPS for last-mile delivery in the UK should prepare for potential disruptions, including a possible strike by Unite. The expansion of the contractor model may lead to lower delivery costs for UPS but could also result in reduced control over service quality and worker accountability. Operators watching the US situation should note that a successful UK rollout could set a precedent for US operations, especially if the Teamsters dispute is resolved in UPS's favor.
Watch List
- Union negotiations: Outcome of consultations with Unite and other unions in the UK.
- Potential strike: Unite's threat of industrial action could disrupt UPS UK operations.
- Teamsters dispute: How the US union's challenge to Roadie progresses.
- Market share dynamics: Whether the contractor model helps UPS regain competitiveness against Amazon and other carriers.
- Regulatory reaction: UK government or regulatory scrutiny of gig-economy last-mile models.
Sources:
