UPS Inc. has agreed to resume labor talks with the Teamsters union in order to avoid a strike that could disrupt supply chains and harm the economy.
The package delivery service said that it would start the talks with the union—which represents 340,000 employees—on July 25, ahead of the looming strike.
Labor negotiations broke down on July 5, with each side blaming the other.
Talks between the Teamsters and UPS began in April over an existing five-year contract covering the company’s drivers, package handlers, and loaders in the United States that expires on July 31.
The union is demanding a five-year agreement that increases pay and full-time jobs, and strengthens protections for all workers, including part-timers.
Both Parties Agree to Preliminary Concessions
UPS has already agreed to eliminate a two-tier pay structure for delivery drivers and to put air conditioning in delivery trucks, but it remains at odds with the union over pay increases for part-time workers who sort packages and load trucks.A UPS spokesperson told CNN that part-time staffers, who represent 55 percent of the 340,000 Teamsters working for the company, actually receive the same benefits as full-time workers.
However, they make less than full-time employees, who earn, on average, $95,000 a year.
Part-time workers begin at $16.20 an hour and are eligible for a higher hourly rate after 30 days; on average, they make $20 an hour, according to the spokesperson.
Experienced part-time workers are making roughly the same amount as, or even less than, new hires since starting wages jumped because of a labor shortage in the past few years.
According to the Teamsters, another issue is that it can take years for part-time workers to become full time.
Teamsters Demand More Rights for Part-Time UPS Employees
Sean O’Brien, president of the Teamsters union, said during a July 22 rally speech in Atlanta, “We’ve organized, strategized, now it’s time to pulverize.”Mr. O’Brien told CNN that 95 percent of the contract was already negotiated, and that “now we’re down to economics, and UPS knows they need to pay our members, especially the part-timers.”
“With the contract expiration less than two weeks away, we need to work quickly to finalize a fair deal that provides certainty for our customers, our employees, and businesses across the country,” a UPS spokesperson told Reuters on July 22.
UPS said that it hopes to “resolve the few remaining open issues” at the talks, and that the company started negotiations “prepared to increase the already industry-leading pay and benefits we provide our full- and part-time union employees and are committed to reaching an agreement that will do just that.”
Earlier in July, UPS said that it would temporarily start training nonunion employees in case a strike occurred.
UPS employed nearly 100,000 nonunion U.S. employees as of the end of 2022.
Although the Teamsters union has accused UPS of making record profits in recent years, the company’s earnings, volume, and revenue dropped year-over-year in the first quarter.
The company also warned of a possible global economic downturn in 2023.
When asked what was next if a deal between the two sides isn’t reached by July 31, Mr. O’Brien told CNN that the union would strike after midnight on August 1.
Mr. O’Brien told CNN that a strike would be felt both domestically and internationally “because the pilots union that represents the pilots for UPS have committed to us that they will not turn a wheel if the Teamsters go on strike.”
A spokesperson for the Independent Pilots Association, the union representing cargo plane pilots working for UPS, confirmed with CNN that it wouldn’t cross picket lines if the Teamsters decided to strike next month.
Teamsters Strike Expected to Disrupt US Economy
“UPS represents our members that deliver goods and services that deliver 7 percent of gross national product,” Mr. O’Brien said.“So, the [UPS] supply-chain solutions will take a huge hit.”
The Retail Industry Leaders Association (RILA) warned that major supply-chain issues would unfold if the union goes on strike and that it could cause it billions of dollars in economic losses.
UPS is the second-largest package delivery service in the United States—just behind the U.S. Postal Service—and delivers roughly 20 million packages per day.
“Even the most robust planning won’t shield retailers or consumers from the impact of shutting down a key component in the supply chain as we head full-steam into back-to-school and then holiday shopping seasons,” RILA said in a statement.
The association said that any disruption in UPS deliveries would have broad consequences because the company handles about a quarter of all U.S. parcel shipments, including deliveries for Amazon, prescription drugs for hospitals, and supplies for millions of small businesses.
Logistics publication Freightwaves said that UPS handled about 18.6 million packages a day in the United States during the first quarter of 2023.
About 30 percent of deliveries, or 4 million parcels per day, could be affected in the event of a strike, it stated.
Regardless of whether a strike occurs, UPS customers are likely to face higher shipping rates, according to analysts.
“A new Teamsters deal could drive the cost per piece [about] 2 percent higher than current expectations,” Bascome Majors, an analyst at Susquehanna International Group, told clients in a note earlier in July, according to Reuters.
The last time that UPS faced a nationwide strike was in 1997 during a 16-day walk-off by the Teamsters, which essentially shut down all U.S. operations and halted deliveries.
During that strike, the delivery service employed only 180,000 Teamsters—slightly more than half the members it has now—at a time when UPS was far less central to the functioning of the U.S. economy, Patrick Anderson, president of Anderson Economic Group, told CNN.
“It wasn’t a tech-centric economy built around small-package delivery then,” Mr. Anderson said.
