UPS Teamsters Update

In our last article related to the UPS/Teamsters negotiations that we published on January 17th, 2023, we mentioned that UPS had made limited comments regarding this topic, due to their desire to “leave the negotiations at the bargaining table.” However, UPS leadership became more vocal about this topic over the last couple of weeks. So, we felt it was important to provide our customers and followers with details of what has since transpired. 

First of all, on January 18th, 2023, UPS published their first ever Jobs and Opportunities report.

https://www.globenewswire.com/news-release/2023/01/18/2590718/30428/en/UPS-Releases-First-Jobs-and-Opportunity-Report.html

Although at first glance this might appear to have nothing to do with the upcoming Teamster contract negotiations, one has to consider the timing of the release of this report. This report was released immediately following the aggressive statements made by Teamster leadership earlier this year, which we detailed in our January 17th article. 

Additionally, the details provided in this report showcase the quality of the compensation and benefits that UPS provides to their 350K Teamster employees. The report highlights the fact that Full Time UPS Drivers receive an average of $95K in base salary, top notch healthcare benefits, along with $23K per year in defined pension contributions. So, this certainly points to UPS efforts to inform the public, their customers, and existing employees that UPS Teamsters are already the highest paid in the industry. This does appear to be a major positioning move on behalf of UPS 

In addition to the UPS Jobs report, the UPS Leadership team has made recent comments related to the upcoming Teamster negotiations. On the UPS 4th Quarter 2022/Full Year earnings call that was held on January 31st, 2023, UPS CEO, Carol Tomé, proactively made statements during her address to the investor community. On the call she stated that “We are well prepared for negotiations and are focused on achieving an agreement that is a win for our employees, a win for the Teamsters, and a win for UPS and our customers. We have great jobs with industry-leading pay and benefits.”  However, she then went on to restate her position, that UPS feels that it is best to leave the details of the negotiations at the bargaining table. 

Later in the call, one of the Financial Analysts covering the call stated that there has been a great deal of rhetoric and big press about the situation which might make customers uneasy about the situation. He went on to ask Carol what message she would want to provide to customers in an effort to ease their concerns. Carol’s response provided a little more insight than has been provided to date. 

She said that “Without getting into the details of what will take place at the bargaining table, I think it’s important to remember that Teamsters have been part of the UPS family for more than 100 years. So, over 10 decades, we’ve negotiated many, many contracts. This is not our first rodeo.” She then went on to make additional comments that were designed to ease some of the fears customers are facing. Carol mentioned that “a win, win, win is very achievable because we are not far apart on the issues.”

 She then described some of the things that UPS and Teamsters agree on, including the fact that both Teamsters and UPS agree that a healthy and growing UPS is good for all. She also mentioned mutual concern for the amount of days and hours that drivers are forced to work, due to the e-commerce explosion that has occurred over the last few years.

In the last UPS-Teamster contract, a new/ lower paid driver category was created, called a 22.4 Driver. These drivers work Tuesday through Saturday and carry a maximum hourly wage of $30.24, vs regular drivers who max out at $42.00 per hour. However, the current UPS-Teamster agreement limits the number of 22.4 Drivers that the company can hire. Therefore, the company often pays weekday drivers overtime to work on Saturdays. 

Carol Tomé implied that concerns about extreme driver working hours should not be a difficult issue to overcome. She stated “And candidly, we think, with just a few tweaks to our existing contract, we can work this out. So, we’re not far apart. We’re aligned. We just need to work it out.”

Teamster General President Sean O’Brien has stated in the past that “We’re open to finding a solution to the seven-day week delivery because that’s what the competition is doing, but the existing staffing solution is not working for us. So, his comments do suggest that the Teamsters are aligned and agree that there needs to be a solution to the issue. 

Although there appears to be alignment on some of the key issues that UPS and the Teamsters are facing, there are still some major questions and concerns that need to be considered;

1. How flexible will UPS and Teamsters be on the issues that they are aligned on? 
2. What issues are they not aligned on? 
3. Will the Teamsters push to eliminate the lower paid driver category, and demand more full time/full paid driver jobs? 
4. Can UPS support the added costs driven by the need to add jobs, increase wages, and improve working conditions?
5. Will the Teamsters agree to accept a lower annual wage increase for current workers, in return for more job creation?
6. Can all of these items be worked out in advance of the agreement expiration on July 31st, 2023?

But the biggest questions of all are: 

1. How will all of this impact shippers that have already had to absorb major increases in rates, driven by record level rate increases?
2. What can shippers do to protect themselves from the increase in costs that a new UPS-Teamster agreement will likely drive?

Thankfully, ICC Logistics will continue to monitor this situation to ensure that our customers and followers are aware of key developments in the process. Also, please be sure to reach out for us to discuss ways that we can help you mitigate the impact of ever increasing carrier costs. We are certain that this will be a valuable investment of your time.