Parcel powerhouse UPS Inc. has struck a last-minute deal with the Teamsters Union on a five-year contract covering some 340,000 warehouse workers and package delivery truck drivers, dodging a potential strike that had spooked shippers and retailers nationwide.
Teamsters leaders today praised the tentative agreement, saying “The overwhelmingly lucrative contract raises wages for all workers, creates more full-time jobs, and includes dozens of workplace protections and improvements.”
The deal still must be approved by union members to become final. Representatives of the 176 UPS Teamster locals in the U.S. and Puerto Rico will meet to review the terms on July 31, and voting will occur electronically between August 3 and 22.
The agreement marked a comeback for both sides after talks broke down on July 5, resuming this week with only a handful of days remaining before the previous contract expires on July 31.
That brinksmanship had made shippers increasingly nervous, as they rush to move inventory into retail stores and e-commerce warehouses before the traditional peak shopping seasons of the autumn back-to-school rush and winter holidays. A strike would have frozen those high-volume supply chains, and forced desperate shippers to find alternative means of moving their goods. However, industry experts said that competing parcel carriers like FedEx, the U.S. Postal Service, and regional carriers lack the capacity to absorb all of UPS’ load.
Although that nightmare scenario appears to have been avoided through today’s tentative agreement, the new contract may send ripples through the nation’s package networks anyway. Wage increases at UPS will likely force rival carriers to raise their pay as well in order to retain their drivers, and all those companies will pass on the extra cost to shippers, and ultimately to consumers, according to the supply chain consulting firm Proxima.
Teamsters leaders also indicated that the deal could affect more employers than just UPS. “We demanded the best contract in the history of UPS, and we got it,” Teamsters General President Sean O’Brien said in a release. “UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers.”
According to the union, the new contract includes workplace improvements including: higher wages, more jobs, equal pay for drivers in the company’s two-tier wage system, the installation of air conditioning in many delivery trucks, and holiday time off for Martin Luther King Day.
In the meantime, UPS leadership is also praising the new deal. “Together we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees, and to UPS and our customers,” UPS CEO Carol Tomé said in a release. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers, and keep our business strong.”
UPS’ largest customers were quick to celebrate the news of a deal, and urged union members to ratify the deal quickly.
“News of a tentative UPS-Teamsters contract agreement is an enormous relief to retailers, who have been navigating the possibility of a strike and the associated uncertainty for weeks. With a work stoppage now taken out of the equation, retail supply chains can continue firing on all cylinders to deliver for consumers across the country,” shippers group the Retail Industry Leaders Association (RILA) said in a release.
“We’ve learned all too well over the last several years the impact supply chain disruptions can have. We’re grateful that this challenge, which would have had a price tag in the billions of dollars and a long runway for recovery, was avoided. With a deal in place that keeps this key link in the retail supply chain fully operational, retailers can head full steam into back-to-school shopping season with confidence, and the U.S. economy can continue its recovery and growth,” RILA said.
Fellow industry group The National Retail Federation (NRF) likewise praised the outcome. “UPS is a major partner of the retail industry, and we are grateful it came to an agreement with the Teamsters without disruption to the marketplace,” NRF President and CEO Matthew Shay said in a release. “The timing of this agreement is critical for consumers and families during the peak back-to-school shopping season. Retailers rely on stability within their supply chains, and this agreement will bring long-term stability, as well as assurance to the millions of businesses and employees who rely on smooth and efficient last-mile delivery.”
Editor's note: This article was revised on July 25 to add input from the Teamsters Union, UPS, RILA, and NRF.
