June 24, 2023

UPS, Teamsters agree to 55 noneconomic contract issues


UPS Inc. and the Teamsters union have agreed to terms on 55 noneconomic issues in bargaining over a new master contract, but the hard work has just begun.

Among the changes are the installation of air conditioners in package cars and other vehicles purchased after Jan. 1, 2024. Another requires that drivers not be forced to work more than 60 hours over a 70-hour workweek, though they could volunteer to do so.

A third requires UPS (NYSE: UPS) to give the union 24 hours’ notice before a supervisor does a ride-along with a driver. A fourth designates areas for subcontractors to operate and requires them to leave the property after certain designated times.

In addition, UPS may not subcontract feeder work if an available worker is laid off or is working out of classification.

The next step is negotiation over wages, benefits and a controversial two-tier pay model, the most difficult part of the contract talks. The Teamsters submitted its economic proposal to UPS on Wednesday, and the union has made no secret it is seeking significant increases.

UPS must tread lightly if it thinks it can pass on added labor costs to the Teamsters in the form of what Dean Maciuba, head of U.S. operations for Crossroads Parcel Consulting, called “punishing rate increases” without thinking it could lose business. FedEx Corp. (NYSE: FDX), UPS’ chief rival, is transforming itself into a lower-cost service provider, which is a “serious threat to UPS on a 2nd front,” Maciuba said in a LinkedIn post.

However, FedEx executives said earlier this week that they have seen no material impact so far from concerns over a possible strike at UPS.

Speaking Wednesday night on a webinar, Teamster General-President Sean O’Brien painted a two-road scenario in which either UPS agrees to Teamster demands or the company doesn’t and the union goes on strike Aug. 1, one day after the current contract expires. “We will leave everything on the field,” O’Brien said, adding that “we have to be united. We are setting a tone for the entire labor movement in the country.”


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