UPS and Teamsters negotiations hit a major roadblock

The stalemate, of sorts, in the labor negotiations between Atlanta-based global freight transportation and logistics services provider UPS and the International Brotherhood of Teamsters (IBT) on a new contract continues to remain intact, with time ticking away until the current contract expires on July 31.

And the contentious tone of the talks between the parties has become even more tense, with the Teamsters saying earlier this morning that the negotiations have collapsed, with UPS having made what the Teamsters called an “unacceptable offer to the Teamsters that did not address members’ needs,” leading to the UPS Teamsters National Negotiating Committee, which represents the 340,000 full- and part-time worker UPS Teamsters members, to reject the offer.

What’s more, the Teamsters said that UPS refused to give the Teamsters a last, best, and final offer, telling the union the company had nothing more to give. As previously stated, the Teamsters said that its UPS members will not report for work after July 31, at the expiration of the current contract, which was indicated by 97% of UPS Teamsters members authorizing a strike last month.

“This multibillion-dollar corporation has plenty to give American workers—they just don’t want to,” said Teamsters General President Sean M. O’Brien in a statement. “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”

UPS had a different take on the situation on these recent developments.

“The Teamsters have stopped negotiating despite UPS’s historic offer that builds on our industry-leading pay,” UPS said in a statement. “We have nearly a month left to negotiate. We have not walked away, and the union has a responsibility to remain at the table. 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. Only our non-union competitors benefit from the Teamsters’ actions. We’re proud of our offer. It delivers wins for our people. The Teamsters should return to the table to finalize this deal.”

Prior to negotiations ceasing, the Teamsters said late last week that there were signs of compromise between UPS and the to avoid the first labor stoppage at the small parcel giant in nearly three decades. UPS had given the Teamsters a revised counterproposal with what Teamsters called “significant movement” on wages and other economic language. The Teamsters said UPS agreed to put a contract offer on the table by July 5 to give Teamster members time to complete voting on a proposed contract by the strike deadline of Aug. 1.

There continues to be widespread belief among rival carriers and observers that there will not be a rerun on the three-week strike that crippled UPS in 1997 under the late union president Ron Carey.

First off, both sides have a lot to lose. Another factor is new UPS CEO Carol Tome's strong track record with labor negotiations. Shippers seem to think the same thing as well. There has not been much diversion, as rival FedEx says it has not seen many big gains from large UPS shippers.

O’Brien, Zuckerman and the full UPS Teamsters National Negotiating Committee held a press conference outside Teamsters headquarters across from the U.S. Capitol on July 1, to provide an up-to-the minute progress report of UPS’s actions at the bargaining table.

“They’ve made some movement but it’s not enough,” O’Brien said on the steps of the Teamsters building. “We will determine when it’s enough.”

O’Brien said the Teamsters’ goal is to win “the best contract—not just for the Teamsters but the entire labor movement. We’re not there yet. For UPS, the ball is in their court.”

The Teamsters are fighting to win a strong agreement with UPS that guarantees better pay for all workers, eliminates a two-tier wage system, increases full-time jobs, resolves safety and health concerns and provides stronger protections against managerial harassment.

UPS, which recorded $100 billion in revenue and over $13 billion in profits last year alone, said late last week it was encouraged that the Teamsters will continue forward progress toward a new five-year labor agreement.

Should a strike occur, one industry estimate indicated that only between 10%-to-20% of UPS’s shipments can be picked up by other carriers like its biggest competitor FedEx, the United States Postal Service, as well as some regional carriers, coupled with a shipment backlog that could take weeks or months to work through.

Trevor Outman, Founder and CEO of San Diego-based parcel consultancy Shipware LLC, told LM that he viewed the 10-to-20% figure as pure speculations, explaining that if there is a strike, businesses who don’t have an alternative carrier and pricing in place by now will have their packages stranded within the UPS logistics network or left at their own warehouse with no pickup.

“It’s true, the fact is that there no way for the non-UPS carriers to absorb all of UPS’ daily volume,” he said. “However, it’s not that simple as businesses won’t be able to phone up FedEx on the day of the strike and ask them for service. For those that have alternatives to UPS in place, the alternative carriers will certainly struggle with the immediate influx of volume. Most UPS shippers are not large enough to justify having more than one carrier, as it diminishes the strength of their pricing to divide volume. All of these shippers will be (if not already) scrambling to contact FedEx, USPS and others for their backup plan; if negotiations don’t improve, and a strike becomes a reality then these non-UPS carriers will be forced to cap the volume they accept. It will be first come, first served. In the worst-case scenario of a strike, there will most certainly be a backlog of shipments that will take weeks to be flushed through the network once workers return.” 

Jerry Hempstead, president of Hempstead Consulting, said that he believes a strike will not come to fruition, noting that he thinks UPS has lost its nerve and is capitulating to all of the Teamsters’ demands.

“I think the union has already achieved its internal goals and now what they get what’s already agreed to,” he said. “So, the story is ‘how does UPS intend to pay for all of this, when do the price increases start, how big is the price increase, and when will it be announced?”