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UPS/Teamsters- Down to the Wire!

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We are getting down to the wire with the UPS/Teamster negotiations. As of today there are only 13 days left on the Teamster strike countdown clock. At this point, there has been no word of a return, or a plan to return, to the negotiating table.

This is continuing to cause a great deal of anxiety for all shippers. 

We have continued to monitor internal Teamsters communications, as well as other media sources in an effort to provide our customers and followers with the latest information. Unfortunately, most of the information that is being reported to UPS Teamsters members from their leadership team includes details related to Practice Picketing, Teamster Unity, and Rallies across the country. 

On Saturday July 15th, UPS Teamsters General President, Sean M. O’Brien and Teamsters Local 804 President Vinnie Perrone, headed up a rally on Long Island, NY. While addressing the crowd, Mr. O’Brien stated “UPS has a choice. They can respect and do right by working people, they can pay the wages that part-time and full-time workers deserve, and they can agree to terms on a strong new contract. Or UPS can wait until August 1 and regret turning its back on the hardworking people who make it a success. We are not backing down. We will take on this corporate bully for as long as it takes to get what we’ve earned.”

Although the Teamsters have stressed that they are not willing to back down, they sort have already done so. The Teamsters had told UPS that they needed to have their last, best and final offer by July 5th, as they needed at least 3 weeks to get the agreement out to vote for ratification. They have stated over and over again, that they will not be working without a contract. They had suggested that without an acceptable offer by July 5th, they would be forced to declare a strike by the end of the month. As we all know, that offer did not come by July 5th. 

So, if the Teamsters were to be true to their word, they should be saying that they will definitely be on strike as of midnight on July 31st, given the fact that the agreement could not possibly be ratified with the limited time that is left. 

On Sunday July 16th, the Teamsters held an online meeting with Teamster members. During the meeting Sean O’Brien informed Teamster members that they will not go on strike by August 1st if they could reach a tentative agreement with UPS before then. He said that “In the event we get a tentative agreement subject to ratification of our members and we recommend it, and our members are satisfied with it, we will work until the contract is ratified….” 

This goes against all of the earlier communications that the Teamsters had put out that stated that they would not be looking for extensions of the existing agreement. Earlier in the process, O’Brien had stated that “When we say the current contract expires July 31, that means we want a new contract in place starting August 1. Not in six months. Not next spring. We demand a historic new contract on August 1, with more money in our members’ pockets immediately.” 

So this does leave some time for UPS to come back with an offer that is acceptable to the Teamsters. Also, if you think about it, would it really have made sense for UPS to make their last best and final offer by July 5th? If an offer had been made, it would have left the door open for the Teamsters to keep asking for more up until the expiration date. So, it is very possible that UPS considered this scenario, and has decided to come in with their final offer as we get closer to the deadline. 

One would hope that deep down inside, the Teamsters and their members don’t want to go on strike. After all, it would also have a major financial impact on them as well. If a strike is called, the union would need to dip into the $300M Strike fund that they reportedly have amassed. This fund could be easily wiped out if the strike went on for a few weeks.  From an individual perspective, Drivers and Part Time workers would receive far less from the union than they receive in their weekly UPS wages. 

For example, a regular Full-Time package car driver would receive approximately $520 per week in strike benefits from the union.  UPS has reported that a UPS Driver receives average weekly wages of approximately $1800. So, the average driver would see a reduction of income of over 70% for each week they are on strike. 

Also, we hope that Teamster leadership realizes the additional damage that would be done to their organization for the long term if they were to strike. Sean O’Brien has gone on record as saying that volume lost to non-union competitors will come back. Based on what we know about the industry, and have been hearing from our customers, we don’t feel that volume will return to UPS the way it has in the past. 

We expect that the remaining single-sourcing customers will be forced to permanently engage the services of other parcel delivery providers to protect themselves. Many have already done so, just due to the threat of a strike. So, not sure how the Teamsters can expect that after an actual strike, they would see all of the volume come back to UPS. There are so many more options for shippers today compared to the last UPS Teamster strike that occurred in 1997, and the options can be far less costly. So hopefully this reality has set in for the Teamsters and their leaders!

We are still uncertain about the governments intent to intervene in these negotiations. In his address to the Teamsters membership on Sunday, Sean O’Brien once again used his Boston street fight analogy, where he describes how people fought in his neighborhood streets, the unwritten rule was that if it had nothing to do with you, you just kept on walking and stayed out of it. He suggested that the government should stay out of this battle.  

Well, from what we can tell, given the fact that UPS carries 6% of the US GDP, one might say that this fight might have something to do with the US Government/US economy, so maybe they shouldn’t just keep walking! 

There have been various reports of UPS preparing for a strike by training non-union delivery workers. Earlier in the process, we had speculated that UPS might try to tap into the PVD (Personal Vehicle Delivery) process that they typically utilize during their peak periods, to help keep packages moving. However, we are not certain how they would be able to support the ongoing pick-up and sortation of packages. It is pretty safe to assume that UPS would only be able to process a small amount of volume, most likely only the packages that have reached their destination delivery facility. 

So, if UPS is truly preparing for a strike, they are most likely considering that they will begin reducing the amount of volume being picked up. We would expect that UPS would need to begin eliminating pick-ups within 5-7 days of the agreement expiration, which does not leave much more time!

Or, this all can come to an end if UPS has indeed been purposely delaying an acceptable offer, in order to prevent the Teamsters from pushing for more. Getting closer to the current agreement expiration doesn’t just put UPS’s back against the wall. As described above, the Teamsters have a lot to lose as well!  So, given this, we are making the prediction that there will be a last minute acceptable offer made, and a strike will be avoided.

Once again, we provide no guarantees that this is how it will shake out. The only thing we are willing to guarantee is that we are ready, willing and able to help you in your efforts to reduce your Transportation and Logistics expenses. So, what are you waiting for?? Reach out for us today!

Tim Binkus brings us the latest on UPS/Teamsters

UPS/Teamster Silence is Loud!

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Crickets!

It has been eerily quiet since our last post related to the UPS/Teamster Contract negotiations on July 7th.  We had been hoping to be able to report on some progress or at least a return to the negotiating table. Unfortunately, that is not the case. The Teamster Contract Expiration Countdown clock is now down to 18 days, which means that if the Teamsters are true to their word, UPS service could come to a screeching halt in under 3 weeks. 

The only activity that we have seen on the Teamster’s side of things are a lot of reports that they are performing, “Practice Picketing” around the country. We are not sure why there would be a need to practice holding signs, and walking around in circles, shouting about the need for higher wages. So, it is probably safe to speculate that these “Practice” picket lines are designed to put more pressure on UPS, and draw attention to the Teamsters intentions to take on all non-union carriers, (especially Amazon!).

Besides these “Practice” picket scenarios, there has been a lot of press around the breakdown in negotiations that occurred on July 5th, along with a lot of finger pointing regarding who actually walked away from the negotiating table. 

On July 7th, UPS issued a statement on their website that said “The Teamsters stopped negotiating this week despite strong proposals from the company that build on our industry-leading pay and benefits for our full-time and part-time employees. We have encouraged the Teamsters to return to the table to continue building on the significant progress we have made, including the recent completion of all local supplements.” 

It went on to say “Just over three weeks remain until the current contract expires on August 1. Refusing to negotiate, especially when the finish line is in sight, creates significant unease among employees and customers and threatens to disrupt the U.S. economy. We are proud of the proposals we have put forward that deliver wins for our people.”

On the Teamsters side, in an interview with CBS News on July 11th, Teamster’s General President Sean M. O’Brien stated that the talks broke down on July 5th after the union was told by UPS that they had “no more money to give, especially for the Part Timers.” The CBS newscaster then read a statement from UPS that stated “The Teamsters have stopped negotiating despite historic proposals that build on our industry-leading pay.”  

Mr. O’Brien’s response again suggested that it was not the Teamsters that walked away, and stated that “all that they need to do is pick up the phone and say that they have a better offer, they know what they need to get this deal done.”

So, the bottom line is that it appears that the Teamsters are continuing to take the same approach that they have throughout these negotiations. They have claimed that they have not made any concessions while gaining agreement on all of the 55 issues (mostly non-economic) that have been tentatively agreed to.  

The statements that O’Brien has made, paints the picture that the Teamsters are not looking to negotiate or compromise with UPS. So far the approach has been – give us the money, or we are going on strike- period! Based on our experience, it is pretty difficult to negotiate and work things out when the other party is unwilling to give or trade anything. 

So where is this going to go? Here are some potential scenarios.

The Show- 

Maybe this is just part of the show that UPS and the Teamsters need to put on, so that both sides can appear to win. Teamster leadership needs to show some strength, given the platform that they used to rise to power. They definitely cannot come out of this being viewed the same way that James Hoffa was following negotiations in 2018, when Hoffa and his team ratified the UPS Agreement despite a majority of UPS Teamsters voting no (we had provided details of this in one of our earlier blogs). So, they cannot make it look like it was easy to get the raises and benefit improvements that they are seeking. This needs to be viewed as a fight to the end!

On the UPS side of things, the company could potentially win by ultimately agreeing to provide improved wages for the struggling “poverty wage Part Time workers”, that the Teamsters have been publicizing for the past few weeks.  This would certainly create some positive press for UPS, and show that they indeed are serious about rewarding their employees. UPS CEO Carol Tome’ has consistently stated her intent to take care of UPS people. So this could help her deliver on this message, and show that UPS is taking care of US workers. 

More importantly, if the Teamsters can deliver a solid wage and benefit package for their members, it could help them in their efforts to gain traction with other non-union carriers, especially Amazon. They have been very vocal about their intent to help the employees of non-union carriers improve their wages, benefits and working conditions. We’re pretty sure that UPS would love to see the Teamsters have success in their efforts to unionize FedEx and Amazon, as this could help level the playing field in the Small Parcel market. 

So, if this is indeed just a big show, then we should expect an announcement in the near future that says that UPS and the Teamsters have returned to the negotiating table, and a subsequent announcement that they have agreed to an historic wage and benefit package. Of course with this, there would not be any strike. 

Government Intervention-

There has been ongoing speculation that the government could intervene and block a strike due to the potential impact that this could have on the US economy. UPS currently handles volume that represents 6% of the US GDP. Also, other carriers, including the USPS could be crippled by extreme volumes being shifted to them. So, this could have a ripple effect across the entire US Supply Chain. Given the fragile economy that exists today, it doesn’t seem likely that the government could ignore this situation. 

However, we would expect that if the government does step in, it will not eliminate challenges that current UPS shippers would face. Shippers would now be relying on disgruntled UPS workers, and a union that is not happy with this unwelcomed intervention. We believe that this would result in serious slowdowns and service issues with UPS volume until a tentative agreement is reached. 

1997 All Over Again-

If it turns out that this is not a show, and the government decides to stay out of this battle, it is then very likely that there will be a UPS strike like the one that occurred in 1997 (lasted for two weeks). Obviously this would have a major impact on UPS, the Teamsters, Shippers, as well as the US Economy. It’s hard to say how long a strike could last. But, experts that we have spoken with feel that it would not last long. After all, the longer that it goes on, the more volume and money that would be lost by UPS. It would cost the Teamsters money as well as they would need to tap into their Strike fund. There could also be a permanent loss of Teamster jobs as some of this volume would never go back to UPS. 

What about me-

Unfortunately, we don’t see how any of these scenarios will be completely positive for Shippers. Sure it will be beneficial if a strike is avoided. However, with or without a strike, there will be added cost for all. UPS is ultimately going to agree to a contract that will create added cost for them. This will be passed along to shippers, and will drive up Small Parcel shipping costs for all carriers.  So we’re sure at this point you are asking “What should I do???” Give us a call today so we can help you answer that question!

Update: UPS/Teamsters Talks Stall

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The UPS Teamsters negotiations took a turn for the worse this week.

We had been encouraged by the progress being made.

Both UPS and the Teamsters had indicated that they had reached tentative agreement on three economic issues. However, talks came to a screeching halt early on July 5th, following a marathon negotiating session. The Teamsters had indicated that they needed to have a last, best final offer by July 5th, to have time to put the proposed contract forward for its members to ratify before the agreement expiration (July 31st). 

So, the big question is what happened?

Both parties have acknowledged that they have come to terms on 55 key issues. However, as we had predicted in the past, the two sides are far apart on wages. Based on comments being made by Teamster Leadership, it seems that Part Time wages is the big sticking point. A majority of UPS Employees are part time. 

It appears that the Teamsters union is looking to use the UPS negotiations as a rallying cry for the struggle of all Part-Time workers in the US. In an internal communication to UPS Teamster members they used the tag line “At UPS, and in the U.S., Part-Time Poverty Doesn’t work”. A statement in the communication by Teamsters General President Sean M. O’Brien stated “It’s a déjà vu maneuver for UPS who should know since 1997 that part-time poverty isn’t working for America.” 

On Thursday AM, O’Brien provided told CNN that There’s no doubt that UPS full-timers make good wages, good benefits,” O’Brien said. “Those trucks don’t go out unless they are loaded and our part-timers are the unsung heroes. They are working for poverty wages and we need to drive up those starting rates of pay.”

On-line reports that we have reviewed indicated that a UPS spokesperson disclosed that part-timers at UPS make an average wage of $20 per hour after 30 days of employment and receive healthcare benefits and pensions. We are certain that there are many individuals in the Part-Time workforce that might feel that UPS Part-Time workers also make good wages and benefits. 

During the interview with CNN, O’Brien was asked if the anxiety around a UPS strike, or actual strike, could hurt Teamster members. He responded by saying that volume lost due to a strike would ultimately come back to UPS. This is a pretty bold statement to make, given the multitude of new Small Parcel carrier options that have developed over the past couple of years. So, Sean may be missing something in his approach. 

However, Sean O’Brien and the Teamsters have continually stated the fact that they intend to take on corporate America in their fight for better pay and wages, especially Amazon.  In the press conference that he held this past Saturday, Mr. O’Brien said “This is the largest collective bargaining agreement in any private sector union,”. He went on to say that this contract could “set the tone and set the standard high for labor — not just the Teamsters but the entire labor movement.”

So the question becomes, are the Teamsters serious in their attempts to make an example of UPS, sacrificing their own members job for the better good of all workers in the US? Or is this just part of the ongoing attempt to squeeze every dime that they can out of UPS. 

Last week, we had predicted that UPS would cave into the Teamsters demands, and then just pass the cost along to customers, to avoid further Shipper anxiety or a strike.  Our prediction was based on the fact that there was a lot of progress being made. However, the recent turn of events is causing us to rethink our position. Based on this recent news, it appears that there is a greater possibility for a strike. 

However, we are sticking to our guns with one part of our prediction. Regardless of the fact that there is a strike or not, the end result will be increased costs for all shippers. UPS has already agreed to many items that will drive up their costs (Improved cooling in vehicles, elimination of Two Tiered Driver system, increased Holidays, etc.). Ultimately UPS will need to agree to an increased wage package for all employees as well. 

Also, if there is indeed a strike, UPS will need to recoup some major lost revenues. So, it appears to be inevitable that we can expect continued record level rate increases from UPS, which will drive the same from the rest of the industry. So, as they say “In Life the only thing that is certain is Death and Taxes. Well we would like to add something else to that phase “AND SMALL PARCEL RATE INCREASES.” 

We might not be able to help you avoid Death and Taxes. However, we are certain that we can help you combat the ongoing onslaught of Small Carrier Rate increases. Reach out to us today to find out how.

UPDATE: UPS/Teamsters Get Contentious

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As expected and predicted, the UPS-Teamsters negotiations have become extremely contentious and heated up over the past week. The union and UPS had both reported that they had reached tentative agreement on non-economic issues. However, there is no surprise that talks related to wages and benefits would bring the negotiations to a screeching halt. The two sides were so far apart that on 06/28, Teamsters General President Sean M. O’Brien stated that “The Largest single-employer strike in American history now appears inevitable.”

Thankfully, since this comment was made there has been some positive movement on key economic issues. It appears that UPS has made some major concessions within the last 48 hours, that have gotten the negotiations back on track.
The Latest Since Our Last Reporting

The Teamsters had walked away from the negotiating table due to UPS providing what they called “an appalling economic counterproposal.” At that time, neither side had released the details of the UPS proposal. However, since then, there have been reports that details of the proposal had been leaked to various social media sites.

We dug into this and found the following information, which allegedly provides details of the UPS Financial offer to the Teamsters. Once again, neither UPS nor the Teamsters have confirmed that this is accurate. However, the details seem to be realistic and believable based on what we would expect UPS to provide in an initial offer. 

According to the communications that we reviewed, the UPS offer included language that would greatly increase the current two tier driver classification (referred to UPS and the Teamsters as the 22.4 tier system), that the Teamsters are actively opposed to. The Teamsters have demanded that UPS eliminate this two tiered system was put in place in the last UPS-Teamster contract. This system had created a lower paid driver classification. These 22.4 drivers split their time between making deliveries and working inside UPS facilities. 

In this alleged offer, it appears that UPS was seeking to develop another tier of Drivers that would be paid even less than current 22.4 drivers. Wage progression would have been tied to two classes of “legacy” workers, those making more and those making less than $20 per hour, and a third tier of new workers hired after the start of the contract on August 1. For both “legacy” categories, general wage increases would have been 14% over 5 years. 

Under the proposal, the 22.4 category would be eliminated and all current hybrid drivers would become Regular Package Car Drivers (which is what the Teamsters had been demanding). However, the progression for all new full-time drivers, (as well as most other non- “inside” categories) would be capped at $32 an hour. This is far below even the current top rate for 22.4 drivers, effectively replacing them with an even lower-paid third tier.

The offer also showed minimal wage increases for Part Timers. It showed a four-year wage progression, starting at $17 and ending at $21 an hour. This proposal would save the company huge amounts of money because the existing/ extremely high turnover rate means that most workers will never stay long enough to reach the top rate.

If this leaked proposal was indeed accurate, no one should be surprised that the Teamsters walked away from negotiations. However, the Teamsters did agree to return to the negotiating table on Friday June 30th.  The Teamsters reported that “under extraordinary pressure from the Teamsters to deliver a strong contract- UPS gave the union a revised counterproposal with significant movement on wages and other economic language.

An Ultimatum by July 5th 

Teamster leadership also provided an ultimatum, stating that UPS needs to provide their last, best, final offer by July 5th, or they will risk a strike after July 31st. The Teamsters have indicated that they need this offer now, in order to allow them time to put the proposed contract forward for its members to ratify before the agreement expiration. 

Following a full day of negotiations on Friday, the Teamsters reported that they had reached tentative agreement with UPS on three major economic issues, “tearing down the 22.4 two-tier wage system, establishing Martin Luther King, Jr Day as a full holiday for the first time, and ending forced overtime on drivers’ days off. 

On Saturday, July 1st– Teamster General President Sean O’Brien held a press conference outside Teamsters headquarters to provide an update on negotiations. During his fiery address, he continued to tout the union’s intent to ensure that all UPS Teamsters are rewarded for efforts that they put forth during the Pandemic, which lead to record level profits for UPS. 

He also stressed that this contract will be used to help strengthen the labor movement in the US. O’ Brien commented that UPS now has the opportunity to be a role model to other companies, and demonstrate what it means to be a good employer, and to reward the people that have made them successful. He acknowledged the fact that UPS drivers are well compensated. However, he also pointed out that a majority of UPS workers are Part Timers who do not earn wages that can sustain a family in the US.

No Concessions for Teamsters So Far

He also stated that all gains made so far, have been accomplished without the Teamsters making any concessions. O’Brien also stressed that the Teamsters will not make any concessions as talks continue. He also said that UPS can “continue to be loyal to Wall Street, and forget about Main St.” However, he warned that this approach would create devastating effects for UPS. He stated that if UPS is not willing to give into the demand of the Teamsters, then “… UPS is making a choice to strike themselves, where we will put 340,000 strong Teamsters on the streets until we get what we want.“ 

On Sunday, the Teamsters indicated that they continued concentrating on economic priorities. Sean O’Brien stated, “The company knows our deadline, and they’ve pledged to meet it. UPS has 60 hours to do the right thing and get a deal done….” He went on to say that “UPS has been given enough warnings at this point. They know what’s waiting for them if they drop the ball on the one-yard line.”

Based on what we have seen and heard so far, it is our opinion that UPS will try to be loyal to Wall St., AND Main St.! Our prediction is that in the near future, we will hear from the Teamsters that UPS has presented them with an historic contract that will reward their members for all of the hard work and sacrifices that their members have made. UPS will then announce that they have been successful in establishing a Win-Win-Win agreement (Win for Teamsters, Customers, and Company). 

It is obvious that the Teamsters will win by receiving the strongest contract that they ever have had. UPS will win by avoiding a costly work stoppage, and will improve their image as a responsible company that rewards their workers. Customers will win by avoiding a work stoppage that could cripple their businesses. UPS will probably also spin this by stating that customers will continue to enjoy the high quality of service that UPS provides through their solid contract with the Teamsters. 

But what about the cost of all this? After all, someone is going to have to pay for the increased costs that will be associated with this new agreement. If the Teamsters are not making any concessions, the end result is going to be a pure cost increase for UPS. So, if UPS is going to try to please Wall St., and Main St., the only place they will have to turn is YOUR Street. 

What This All Means For You

It is important to note that this will not only impact UPS customers. FedEx has historically matched UPS rate increases, and one can expect them to continue to take advantage of the opportunity to improve their margins. Also, the Teamsters will continue to put pressure on Amazon, which will inevitably cause them to increase compensation to their workers. The bottom line is that no one is immune from the impacts of a new UPS-Teamster agreement. 

So, we will continue to stress the need to start planning for major increases that are sure to come. We welcome the opportunity to meet with you to help you begin building a strategy that will help you protect your bottom line. Please reach out to us today to schedule a free Cost Control Strategy consultation. 

Important Developments Alert: UPS/Teamsters

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To ensure our readers and followers have the most current information regarding the UPS/Teamster Labor Negotiations, we are providing some important developments this week following the article that we released on Monday, June 19, 2023. Given that there are only 38 days until the expiration of the current UPS/Teamsters contract, we felt that it was important to release this information immediately, and will continue to do so as these negotiations are on-going..

First, on Tuesday the Teamsters announced that they had reached a tentative agreement with UPS on ALLl non-economic issues. Their communication quoted Teamster’s General Secretary-Treasurer Fred Zuckerman as saying that “we have reached tentative agreement on well over 40 non-economic issues that affect all our members at UPS, and we did it as a team. The Teamsters haven’t sacrificed a single concession in these negotiations.”

This was good news for the overall negotiations. However, as stated in our last article, the most difficult issues now need to be addressed. Namely, the economic issues which include wages, benefits, and the Two-Tiered Driver classification system UPS currently employs. 

Our article had predicted that the Teamsters wage and benefit proposal would likely be aggressive, given the stance they have taken related to recent UPS profitability. The Teamsters have been consistent in their messaging, stating that they are looking for their UPS members to share in the profits and success of the company.

Well, it looks like our prediction might have come true. On Wednesday, the Teamsters National Negotiating Committee shared its full economic package with UPS- calling it “…. The biggest, most lucrative financial proposal ever presented by a labor union.” 

Although specifics were not shared, the Teamsters identified priorities as wage increases each year of the contract for everyone, catch-up raises for part-timers, additional holidays and more paid time off, pension increases, protection and enhancement of existing health and welfare benefits, the complete elimination of the two-tier 22.4 job classification for drivers, and more full time jobs created over the next five years. 

As stated, there were no specific details provided related to the Teamsters demands. But, the statements made so far make it easy to speculate that the requested wage increases will be record breaking (as predicted in our last article). All in all, these demands will undoubtedly be extremely costly for UPS (and ultimately costly for all shippers). 

Late on Thursday, the Teamsters communicated some startling news to their members. They stated that “UPS executives gave the Teamsters National Negotiating Committee an appalling economic counterproposal…” They suggested that the proposal included minimal raises and overall wage cuts to workers’ cost-of-living adjustments. 

According to the communication, the Teamsters unanimously rejected the “disrespectful proposal.” It went on to say that “The Teamsters National Negotiating Committee told UPS they will not meet again until the company makes a realistic and respectful economic offer.” 

Teamster General Secretary-Treasurer Fred Zuckerman made the following statement.  “UPS is well aware that the ball is now in their court. We are not messing around here. If they want to see the Teamsters back at the bargaining table any time soon, UPS has got to get serious fast.” He went on to say that “The Teamsters are not trading for anything. And we are not accepting whatever crumbs these executives might throw our way. UPS has made plenty of money. Our members have sacrificed everything to make them rich. We are demanding a real offer right now.”

Teamsters General President Sean O’Brien provided an ominous warning, he said “… if UPS wants to negotiate a contract for 1997 working conditions, they’re going to get 1997 consequences.” (referencing the last time that the UPS-Teamsters went on strike). 

So, it appears that our earlier statements related to the situation are quite accurate- THE TEAMSTERS AND UPS HAVE A LONG WAY TO GO WITH THESE NEGOTIATIONS.” 

Given the fact that the Teamsters have held their position that they will not provide any concessions in these negotiations, it is hard to see how UPS will come out of this process unscathed. The Teamsters have consistently publicized the fact that they are ready to strike if they do not get what they want (and think they deserve).

So it appears that UPS might have its back up against the wall. 

We will continue to closely monitor the situation, and report on major developments as they occur. So, stay tuned. It would also be wise to start looking at your budgets for 2024 and to start making plans for what could be the largest Transportation cost increases your companies have ever seen. The time is now to develop a strategy to help combat out of control shipping costs. We would love to be part of that strategy, so please don’t hesitate to reach out to us now so you are well positioned for next year.

Latest UPS-Teamsters Update

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The UPS Teamster official countdown clock read 42 Days, 13 hours and 58 minutes until the expiration of their contract with UPS, at the time that we started to write this article. It has been well publicized that the Teamsters intend to strike if an agreement is not reached by midnight of July 31st, 2023. Based on the information that has been released by both sides, there still appears to be a long way to go. There are some major issues that have yet to be addressed.

On 06/13/23, UPS provided an update on their website that announced that UPS and the Teamsters had reached an agreement related to Heat Safety. This is one of the main issues that the Teamsters had brought to the negotiating table. Teamster leadership had made a similar announcement to their membership ranks the day before. 

This should not come as a surprise to anyone, given the bad press that UPS received last summer when a UPS Driver in California died from Heat Stroke while out on his route. Following this incident, there was a flurry of news stories and articles that came out, which shed a light on the challenges that UPS Drivers faced due to the heat and lack of cooling systems in UPS vehicles. 

So, at the end of the day, one would not expect agreement on this issue to be too difficult. It was pretty obvious that this needed to be fixed!  According to announcements made by UPS and the Teamsters, there will be fans installed in all delivery vehicles immediately following contract ratification. Additionally, UPS has committed to equip all newly purchased U.S. small package delivery vehicles with air conditioning starting January 1, 2024.

Other news coming from these negotiations that came as no surprise was that the Teamsters overwhelmingly approved their strike authorization. This is a process that unions often use to build leverage in the negotiations.  A strike authorization vote does not necessarily mean a strike is imminent, but is a way for a union to add pressure and send a message that membership is willing to strike if negotiations are not met. 

There was no doubt that UPS Teamster membership would  vote “Yes” to authorize a strike.  Before the vote was finalized the UPS website stated that “…the Teamsters asked their UPS members to participate in a strike authorization vote—a routine part of the bargaining process—which voting members will overwhelmingly approve. “

So, now we have begun to see news releases made by the Teamsters that hype their unity and memberships willingness to strike. Once again, designed to create leverage in the process. The sad thing about this process is that besides creating leverage against the company, it also creates more anxiety for shippers. There are many companies that will see the press about the approval of a Strike by UPS Teamsters, and will misinterpret the news. 

Some may think that this means that there is going to be a strike. Others might see this as a sign that things are not going well in the negotiations, and cause them to consider moving volume away from UPS. So, this process could just lead to more volume bleed for UPS. Packages will move to non-union carriers, and may never come back. 

Although there has not been any agreement on major economic issues, The Teamsters and UPS have both expressed satisfaction with progress being made in the negotiations. Teamster General President Sean M. O’Brien said that “We’re up to 43 total non-economic changes that have already been made to the UPS Teamsters National Master Agreement. This is an extraordinary number of tentative agreements reached and language changed at this stage of negotiations.” The UPS website has also indicated satisfaction with progress being made. 

But to us, the 800 lbs. Gorilla in the room is the main economic elements of the negotiations. It appears that there have not been any discussions related to wages/ benefits, or the two tiered driver classifications that the Teamsters are strongly opposed to. Both of these items could be extremely costly for UPS. 

The Teamsters have stated over and over again, that they expect to benefit from the record profits that UPS has seen in recent years. So, what will they be expecting in the form of wage and benefit increases? Will they expect UPS to fully eliminate the two tiered Driver classification scenario? The Teamsters have also stated that they will not agree to any concessions in these negotiations, and are claiming that they have not done so up until this point. 

Given this, one should expect that the Teamsters will be seeking record level wage increases to be in line with the record profits that UPS has seen. Based on the Teamsters approach to these negotiations, there will likely be some serious demands made, with no give backs. So, the discussion over the coming days and weeks will be the most difficult by far. Far more difficult than the issues that have been settled. 

At the end of the day, UPS may be forced to agree to the largest wage increases they have ever awarded. On top of this, UPS has agreed to many issues that will be costly for them (Air Conditioning and Fans in package cars etc.)  The unfortunate part of this, is that the ones most likely impacted by this will be the shipper. 

The UPS GRI was the highest that it’s ever been this year at 6.9%. With all of the added expense that UPS is going to incur, it is possible that shippers should be prepared for more records to be broken. Of course UPS can try to offset the cost of higher wages through the use of technology and automation. However, this can be costly also, especially in the short term. On top of this, UPS has already agreed to increased scrutiny on the use of technology. 

One of the new agreements states that UPS would be required to negotiate with the Teamsters at least 45 days before it introduces certain technology such as drones, driverless vehicles etc. The Teamsters are actively opposed to any technology that is going to eliminate Teamster jobs. So, this will make it harder for UPS to find ways to reduce costs. This means only one thing- higher rates!

So, I think we can all see where this is going. We cannot stress enough the importance of planning for the large increases that are sure to come. Failure to gain control of these spiraling costs will have a major impact on bottom lines. Don’t wait until it’s too late. Give us a call now to get ahead of the record level rate increases that we are predicting for 2024!