UPS/Teamster Silence is Loud!

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!