UPS, Teamsters Will Return to the Table

On Monday, Alan Thornton, manager of Odyssey Video in West Los Angeles, will meet his sales rep near the offramp at the intersection of the 405 and 101 freeways. His mission: to pick up the latest video releases, including “The Devil’s Own” and “Mother,” which would normally be shipped to him via United Parcel Service of America Inc.

“It’s like we’re going out to do a drug deal by the offramp,” said Odyssey owner Steven Gabor. “It’s ridiculous.”

Gabor praised the distributor, Tennessee-based Ingram Entertainment, for making the unusual effort to get him the videos. The important factor for Gabor is that the new titles will be at Blockbuster, and he needs them to compete.

The UPS strike is proving to be a critical problem for many small-business owners across the country. From kids’ back-to-school clothes to gourmet food, products aren’t reaching customers.

In the entertainment industry, the main impact has been felt by the thousands of small and mid-size retailers like Gabor, who have already been suffering from lackluster video and record sales. Many of them are dependent on UPS for virtually all of their shipments.

Video Business magazine estimates that as many as 95% of all videos are shipped via UPS somewhere along the line from distributor to warehouse to retailer. Most affected will be mom-and-pop stores, which lack the economic might, not to mention the delivery trucks, of the big chains.

Universal Video & Music Distribution President Henry Droz said the strike is primarily affecting his company’s ability to fill smaller orders. Universal has lowered the minimum amount to be shipped by truck from 150 to 75 units, but companies placing orders of less than 75 pieces will have to wait.

“We are using alternate air and truck service when we can, but we’re all just hoping this is settled within a couple of weeks,” Droz said.

Though Droz said Universal has no “huge” releases planned for this week or next, PolyGram Group does. Jim Caparro, president and chief executive of distribution for PolyGram (which distributes for Mercury, Def Jam and other record labels), said, “We had already made some contingency plans, because we have [music group] 311 and the soundtrack to ‘How to Be a Player.’ ”

Distributors say they are making extra efforts for major releases or albums that are suddenly hitting big in a particular area. “If we have priority product, we’ll ship it by air,” Droz said. Just as smaller stores are being hit the hardest by the strike, smaller releases are more likely to suffer lost sales.

Caparro said that, like Universal, his company will not be able to fill all small orders immediately. “We normally ship 20% to 25% of our product through UPS,” he said. “The real problem everyone is facing now is the added burden on the entire transportation network. I may be down to using donkeys soon.”

One smaller distributor found a creative solution to the UPS strike. Kirk Kirkpatrick, vice president of marketing for Owensboro, Ky.-based video and music distributor Wax Works/Video Works, said his company is using its chain of Disc Jockey Records retail locations as drop-off points for its video distribution customers.

“We service about 3,600 stores, mostly small and mid-size chains,” Kirkpatrick said. “We’re paying to truck the videos from our three warehouses to 40 of our 120 retail stores.”

Meanwhile, movie theater owners don’t seem worried about new releases, such as Warner Bros.’ “Conspiracy Theory,” showing up as planned this week. Studio representatives uniformly said they do not use UPS.

“The only problem we might encounter is if the other companies we use get overloaded with packages that normally would go by UPS,” said New Line Cinema spokesman Steve Elzer.

Technicolor Entertainment Services, which distributes studio films, said it uses Airborne Express and that service was going as planned. New Jersey-based National Film Service said it usually uses UPS but is making due with carriers such as Federal Express and DHL.