Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Every five years, UPS Inc. and the Teamsters Union step into the ring to negotiate the nation's biggest
collective bargaining agreement. Riding on the outcome are the livelihoods of about a quarter of a million
workers and the fate of nearly 16 million parcels and letters tendered or received by 8.8 million global
customers.
The opening bell has sounded.
Atlanta-based UPS and the union that it has been married to—for better or worse—for about 75 years
met in Washington Sept. 27 so the Teamsters could formally present UPS with its initial proposals for two contracts.
The big contract covers between 240,000 and 250,000 employees in the company's small-package operations. The other proffer
governs an additional 12,000 to 13,000 workers in its UPS Freight less-than-truckload (LTL) unit.
The start date is unusual in that it comes almost 10 months before the July 31, 2013, expiration of both five-year
contracts. The two sides agreed on the early start.
In an early June statement, the Teamsters said the decision to "push UPS to the bargaining table" was
triggered by the company's "recent strong financial performance" and its record profits.
"The struggling economy and the company's recent announcements about record quarterly profits make this good timing to
open negotiations," Ken Hall, general secretary-treasurer and former director of the union's package division, said at the
time. Hall is leading the Teamsters' negotiating team.
Hall said in the statement that the union first wants to address "operational issues" such as subcontracting, workload,
and safety and health so it can focus next year on the contract's financial components, such as wages, health care, and pensions.
UPS declined to comment. Generally, companies favor an early launch date for contract talks in order to get the matter quickly
behind them, and to provide their customers with enough lead time to establish contingencies if negotiations don't go as planned.
Hall spent Sept. 21 in Chicago briefing a cluster of local union officials representing UPS and UPS Freight on key contract
issues. In a Sept. 24 post on its website, the Teamsters said the "UPS and UPS Freight proposals were unanimously approved" by
the local unions. The Teamsters would not comment on specifics of its proposals.
INTERNAL DISAGREEMENT
In a document posted on its website, Teamsters for a Democrat Union (TDU), a dissident group that
frequently clashes with the union establishment led by longtime General President James P. Hoffa, said
that Hall told the locals he would keep union demands modest at UPS Freight because the unit has not been
profitable. According to the TDU document, Hall said the priorities in talks with UPS Freight would be pensions,
health care, and wages, in that order.
Most of the attention, however, will be focused on the small-package bargaining. According to TDU, the union's
proposals include increases in pension payments, including hikes for the 48,000 full-time UPS workers that in 2007
were transferred from the Teamsters' Central States multiemployer pension plan to one that is jointly administered by
UPS and the union.
Under the multiemployer scheme, companies fund pensions not just of their own workers and retirees but also of workers at
other firms participating in the plan. In the trucking industry, that program worked well as long as there were numerous
unionized truckers to equitably distribute the costs. As bankruptcies and consolidations decimated the ranks of union carriers,
survivors like UPS became liable for a larger share of the cost.
UPS paid $6.1 billion to withdraw from the original plan, one of the Teamsters' largest, because it was fed up with funding
the pensions of retirees from other, long-gone companies. It is expected that the change will save UPS a significant amount of
money over time.
According to TDU, the Teamsters proposal also calls for wage increases, especially in starting pay for part-timers. All
part-time workers, other than sorters and pre-loaders, start at $8.50 an hour, a rate TDU said has been frozen since 1987.
Another small-package contract objective, according to TDU, is to force UPS to honor its commitment to convert thousands of
part-time Teamsters jobs to more generous full-time positions. A provision of the 2007 contract requires UPS to offer part-timers
the chance to fill at least 20,000 full-time operational jobs during the life of the contract. Six of every seven available
full-time jobs would have to be staffed by former part-timers, according to the contract.
Similar language was included in contracts negotiated in 1997 and 2002. The issue became a rallying cry for the union in 1997
when it called a strike that shut down UPS for 15 days.
However, Ken Paff, TDU's veteran chief organizer and one of Hoffa's fiercest critics, said the company has not lived up to its
end of the contract bargain over the past five years, and the union leadership hasn't held UPS' feet to the fire.
According to Paff, Hoffa agreed not to aggressively pursue the issue in return for management allowing the Teamsters to
organize workers at UPS Freight, which was known as Overnite Transportation Co. before being acquired by UPS in 2005 for $1.2
billion. Overnite was nonunion throughout its long history, and endured a prolonged and sometimes violent battle with the
Teamsters to stay that way.
Paff said that Hoffa acquiesced in order to show some gains in the union's once-powerful freight division that has been badly
depleted over the years by unionized carrier bankruptcies and a widespread shift to nonunion trucking operations.
SUREPOST, FEDEX COULD BE FACTORS
TDU indicated that Hall wants UPS to propose language that would protect Teamsters jobs threatened by the growth of the
company's delivery relationship with the U.S. Postal Service, in return for the "union's continued cooperation" with the
program, known as "UPS SurePost."
Under the program, UPS tenders parcels to the USPS, which then takes the shipments the so-called "last mile," from the local
post office to destination. The program, designed for e-commerce shipments from online merchants to residences, is inexpensive
for shippers. In many cases, it gives e-merchants the latitude to offer free shipping to its customers, a feature that often
cements an online sale.
The delivery model has gained enormous traction in recent years, mirroring the rise of e-commerce itself. While it is a
relatively low-margin business for UPS, it remains a big growth segment for the company. This is in marked contrast to its
traditional business-to-business service, which has dramatically slowed as companies become more cautious about the U.S. and
international economic environment.
Since the program took off, the Teamsters have grumbled that it reduces the need for more drivers. Paff, for his part, said
it could violate the existing small-package agreement that prohibits subcontracting a service that would otherwise be performed
by a driver.
However, a well-placed industry source said UPS does not divert packages to nonunion subcontractors. Instead, the source said,
the company gives shippers the option of either using UPS to deliver a package directly to the residence or using it to deliver
to the local post office, where the package is turned over to the letter carrier for the last leg.
Still, the source agrees that the program, on balance, lessens the need for UPS drivers and cuts back on their potential
overtime.
The union may need to tread lightly on this issue during negotiations. FedEx Corp., UPS' chief rival and a nonunion ground
carrier, offers a similar service with USPS known as "SmartPost." Given FedEx's labor-cost advantages and the fact that the
product is already price-sensitive, businesses could easily migrate to FedEx should the Teamsters play hardball with UPS, whose
drivers are paid close to $30 an hour and are considered to have generous benefits.
In fact, the specter of FedEx could loom large over all of the talks. FedEx Ground, which competes directly with UPS' core
ground-parcel business, has made major strides over the past 15 years, winning new business and taking market share from its
rival. The Teamsters are not oblivious to the fact, confirmed in FedEx's most recent quarterly results, that all of FedEx's
growth is coming from its ground parcel and LTL units, while its core air business stagnates.
On Oct. 9 and 10, FedEx will unveil a long-awaited plan to revamp its FedEx Express air and international unit, which has been
plagued by high costs and weaker demand for airfreight services in the United States and abroad. Analysts and observers expect the
company to announce significant cost reductions at the two-day meeting.
While the savings would mostly affect FedEx's Express unit, they could bleed into other parts of its operations as well. The
net effect could widen FedEx's cost advantage over UPS, resulting in even more shipment migration.
The initial salvo has just been fired, and no one expects the first round to be the last word. Still, with a slowing U.S.
economy, uncertainty over the November election and fiscal policy in Washington, a monetary crisis in Europe, still-elevated
unemployment, and the threat posed by UPS' very formidable rival, it is thought that the Teamsters will be anxious to strike
a deal, and to do it quickly.
A move by federal regulators to reinforce requirements for broker transparency in freight transactions is stirring debate among transportation groups, after the Federal Motor Carrier Safety Administration (FMCSA) published a “notice of proposed rulemaking” this week.
According to FMCSA, its draft rule would strive to make broker transparency more common, requiring greater sharing of the material information necessary for transportation industry parties to make informed business decisions and to support the efficient resolution of disputes.
The proposed rule titled “Transparency in Property Broker Transactions” would address what FMCSA calls the lack of access to information among shippers and motor carriers that can impact the fairness and efficiency of the transportation system, and would reframe broker transparency as a regulatory duty imposed on brokers, with the goal of deterring non-compliance. Specifically, the move would require brokers to keep electronic records, and require brokers to provide transaction records to motor carriers and shippers upon request and within 48 hours of that request.
Under federal regulatory processes, public comments on the move are due by January 21, 2025. However, transportation groups are not waiting on the sidelines to voice their opinions.
According to the Transportation Intermediaries Association (TIA), an industry group representing the third-party logistics (3PL) industry, the potential rule is “misguided overreach” that fails to address the more pressing issue of freight fraud. In TIA’s view, broker transparency regulation is “obsolete and un-American,” and has no place in today’s “highly transparent” marketplace. “This proposal represents a misguided focus on outdated and unnecessary regulations rather than tackling issues that genuinely threaten the safety and efficiency of our nation’s supply chains,” TIA said.
But trucker trade group the Owner-Operator Independent Drivers Association (OOIDA) welcomed the proposed rule, which it said would ensure that brokers finally play by the rules. “We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations. As FMCSA noted, broker transparency is necessary for a fair, efficient transportation system, and is especially important to help carriers defend themselves against alleged claims on a shipment,” OOIDA President Todd Spencer said in a statement.
Additional pushback came from the Small Business in Transportation Coalition (SBTC), a network of transportation professionals in small business, which said the potential rule didn’t go far enough. “This is too little too late and is disappointing. It preserves the status quo, which caters to Big Broker & TIA. There is no question now that FMCSA has been captured by Big Broker. Truckers and carriers must now come out in droves and file comments in full force against this starting tomorrow,” SBTC executive director James Lamb said in a LinkedIn post.
The “series B” funding round was financed by an unnamed “strategic customer” as well as Teradyne Robotics Ventures, Toyota Ventures, Ranpak, Third Kind Venture Capital, One Madison Group, Hyperplane, Catapult Ventures, and others.
The fresh backing comes as Massachusetts-based Pickle reported a spate of third quarter orders, saying that six customers placed orders for over 30 production robots to deploy in the first half of 2025. The new orders include pilot conversions, existing customer expansions, and new customer adoption.
“Pickle is hitting its strides delivering innovation, development, commercial traction, and customer satisfaction. The company is building groundbreaking technology while executing on essential recurring parts of a successful business like field service and manufacturing management,” Omar Asali, Pickle board member and CEO of investor Ranpak, said in a release.
According to Pickle, its truck-unloading robot applies “Physical AI” technology to one of the most labor-intensive, physically demanding, and highest turnover work areas in logistics operations. The platform combines a powerful vision system with generative AI foundation models trained on millions of data points from real logistics and warehouse operations that enable Pickle’s robotic hardware platform to perform physical work at human-scale or better, the company says.
Bloomington, Indiana-based FTR said its Trucking Conditions Index declined in September to -2.47 from -1.39 in August as weakness in the principal freight dynamics – freight rates, utilization, and volume – offset lower fuel costs and slightly less unfavorable financing costs.
Those negative numbers are nothing new—the TCI has been positive only twice – in May and June of this year – since April 2022, but the group’s current forecast still envisions consistently positive readings through at least a two-year forecast horizon.
“Aside from a near-term boost mostly related to falling diesel prices, we have not changed our Trucking Conditions Index forecast significantly in the wake of the election,” Avery Vise, FTR’s vice president of trucking, said in a release. “The outlook continues to be more favorable for carriers than what they have experienced for well over two years. Our analysis indicates gradual but steadily rising capacity utilization leading to stronger freight rates in 2025.”
But FTR said its forecast remains unchanged. “Just like everyone else, we’ll be watching closely to see exactly what trade and other economic policies are implemented and over what time frame. Some freight disruptions are likely due to tariffs and other factors, but it is not yet clear that those actions will do more than shift the timing of activity,” Vise said.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index indicating the industry’s overall health, a positive score represents good, optimistic conditions while a negative score shows the inverse.
Specifically, the new global average robot density has reached a record 162 units per 10,000 employees in 2023, which is more than double the mark of 74 units measured seven years ago.
Broken into geographical regions, the European Union has a robot density of 219 units per 10,000 employees, an increase of 5.2%, with Germany, Sweden, Denmark and Slovenia in the global top ten. Next, North America’s robot density is 197 units per 10,000 employees – up 4.2%. And Asia has a robot density of 182 units per 10,000 persons employed in manufacturing - an increase of 7.6%. The economies of Korea, Singapore, mainland China and Japan are among the top ten most automated countries.
Broken into individual countries, the U.S. ranked in 10th place in 2023, with a robot density of 295 units. Higher up on the list, the top five are:
The Republic of Korea, with 1,012 robot units, showing a 5% increase on average each year since 2018 thanks to its strong electronics and automotive industries.
Singapore had 770 robot units, in part because it is a small country with a very low number of employees in the manufacturing industry, so it can reach a high robot density with a relatively small operational stock.
China took third place in 2023, surpassing Germany and Japan with a mark of 470 robot units as the nation has managed to double its robot density within four years.
Germany ranks fourth with 429 robot units for a 5% CAGR since 2018.
Japan is in fifth place with 419 robot units, showing growth of 7% on average each year from 2018 to 2023.
Progress in generative AI (GenAI) is poised to impact business procurement processes through advancements in three areas—agentic reasoning, multimodality, and AI agents—according to Gartner Inc.
Those functions will redefine how procurement operates and significantly impact the agendas of chief procurement officers (CPOs). And 72% of procurement leaders are already prioritizing the integration of GenAI into their strategies, thus highlighting the recognition of its potential to drive significant improvements in efficiency and effectiveness, Gartner found in a survey conducted in July, 2024, with 258 global respondents.
Gartner defined the new functions as follows:
Agentic reasoning in GenAI allows for advanced decision-making processes that mimic human-like cognition. This capability will enable procurement functions to leverage GenAI to analyze complex scenarios and make informed decisions with greater accuracy and speed.
Multimodality refers to the ability of GenAI to process and integrate multiple forms of data, such as text, images, and audio. This will make GenAI more intuitively consumable to users and enhance procurement's ability to gather and analyze diverse information sources, leading to more comprehensive insights and better-informed strategies.
AI agents are autonomous systems that can perform tasks and make decisions on behalf of human operators. In procurement, these agents will automate procurement tasks and activities, freeing up human resources to focus on strategic initiatives, complex problem-solving and edge cases.
As CPOs look to maximize the value of GenAI in procurement, the study recommended three starting points: double down on data governance, develop and incorporate privacy standards into contracts, and increase procurement thresholds.
“These advancements will usher procurement into an era where the distance between ideas, insights, and actions will shorten rapidly,” Ryan Polk, senior director analyst in Gartner’s Supply Chain practice, said in a release. "Procurement leaders who build their foundation now through a focus on data quality, privacy and risk management have the potential to reap new levels of productivity and strategic value from the technology."