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!
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