This week ICC Logistics Services was encouraged by developments related to the ongoing UPS-Teamster contract negotiations. There appears to have been some decent progress made this week, and a less aggressive tone from the Teamsters organization.
The most positive news is that the National negotiations finally kicked off on Monday May 8th. It is interesting to note that these negotiations started, even though there were two supplemental agreements that have not been settled.
Teamster leadership had been steadfast in their position that they would not start National negotiations until all supplemental agreement negotiations had been completed. It was encouraging to see that Teamster leadership demonstrated a little flexibility in the process.
Internal Teamster communications took on a more positive tone as well. On May 9th, Teamster leadership communicated to their members that they made “Early Gains as UPS National Negotiations Move Forward”.
They went on to describe that they had reached tentative agreement on five issues; greater time flexibility for shop stewards, improved processes for new equipment related grievances, more opportunities for existing Teamsters members, improvements impacting trailer shop employees, and expanded protections under the National Master Agreement’s non-discrimination clause.
Teamster General Secretary-Treasurer Fred Zuckerman commented on the progress made with the National negotiations. He stated that “What’s most critical about these early hours of national negotiations is that big gains are already being made and the Teamsters have made zero concessions to get them.”
Up until this point, most of the communications that Teamster that we had seen were quite negative, and accused UPS of dragging their feet and not being serious about the negotiations. This change in tone creates some hope that these negotiations will conclude early, without continued threats or the possibility of a work stoppage.
We are not sure what has sparked the change in tone and approach that the Teamsters seem to be taking. Maybe they are starting to realize that contentious negotiations are not good for them or the company? Maybe they read the last article that we put out on May 2nd that described the differences in the competitive landscape of the small parcel market compared to 1997, when the last UPS strike occurred.
ICC Logistics is not the only company pointing out the damage that contentious negotiations, and strikes can have on the Teamster negotiations as well as UPS. In a Freightwaves article published on May 03, 2023, Satish Jindel president ShipMatrix provided some interesting facts to help demonstrate the impact of work stoppages.
Jindel pointed out that unionized LTL carriers had 60% of the LTL market in 1993. Then following an LTL Teamster strike in 1994, and continued diversion to non-union carriers, t
he share of volume moving through union carriers dropped to 35% by 2010. In 2023, unionized LTL carriers only handle 22% of the market.
The bottom line is that shippers will take measures to avoid the risk of packages being held up in labor disputes. They also will continue to seek less costly alternatives. So, as unionized carrier rates continue to rise, there will be more pressure on shippers to seek out less costly options. This typically results in a volume shift to non-union carriers. The danger for the Teamsters in today’s world is that there are far more solid options for shippers today.
So, with progress being made, the National negotiations will continue to heat up. It appears that most of the terms that have been agreed to so far are minor issues. Now, the negotiations will shift to the more difficult and contentious issues.
On Thursday May 11th, Teamster leadership formally submitted their proposal to UPS to end the two tier wage system that is currently in place for UPS Drivers. “This will certainly be one of the biggest and most important proposals passed across the table to UPS by our committee,” said Teamsters General President Sean O’Brien. “Any two-tier wage system isn’t going to fly with the Teamsters. We are demanding equal pay for equal work. “
This proposal could be costly for UPS, so it will be interesting to see how they respond to this. Additionally, the Teamsters are pushing for higher pay for all of their UPS workers. So, the financial impact of a new UPS Teamster contract could wind up being costly for shippers.
ICC Logistics will continue to monitor and report on these ongoing negotiations, as the outcome could have a big impact on the Small Parcel market. So, stay tuned for further developments. Also, feel free to reach out for us now to find out how you can get ahead of the potential impact of rising shipping costs. Don’t wait for shipping costs to get out of control!
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