UPS initiates contingency plans should its Teamsters’ members strike

Taking steps to ensure business operations remain intact, should its Teamsters members go on strike, when the current labor agreement expires, at the end of July, Atlanta-based global freight transportation and logistics services provider said late last week that it making preparations, in the event of a strike.

“We remain focused on reaching an agreement with the Teamsters that is a win for UPS employees, our customers, our union, and our company before Aug. 1,” UPS said in a statement issued on July 14. “While we have made great progress and are close to reaching an agreement, we have a responsibility as an essential service provider to take steps to help ensure we can deliver our customers’ packages if the Teamsters choose to strike.

To that effect, UPS said that over the coming weeks, many of its U.S. employees will participate in training that would help them safely serve its customers if there is a labor disruption.

“This temporary plan has no effect on current operations and the industry-leading service our people continue to provide for our customers,” said UPS. “This training is aligned with our ongoing commitment to safety and business continuity. These activities also will not take away from our ongoing efforts to finalize a new contract that increases our employees’ already industry-leading wages and benefits, allows UPS to remain competitive and provides certainty for our customers and the U.S. economy.”

As previously reported, the contentious tone of the talks between the parties has become even more tense, with the Teamsters saying earlier this month 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.

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.” 

A July 16 Bloomberg report noted that “the last major sticking point for renewing a new five-year labor agreement has to do with the Teamsters asking for higher part-time wages.

The report cited the Teamsters’ O’Brien as saying it is unacceptable that 100,000 part-time UPS workers make less than $20 per hour.

UPS countered that earlier this month, stating that part-time union employees at UPS currently make an average of $20 an hour after their first 30 days of employment and receive wage increases every year, in addition to cost-of-living adjustments.

And in addition to competitive pay, the company said UPS part-time employees receive the exact same industry-leading health and medical benefits as full-time employees.

“They are among just 7% of U.S. private sector employees to receive a pension, and also receive healthcare benefits with no premiums and low or no copays,” said UPS. “Starting part-time wages are $16.20 (at minimum).”

Shipware’s Outman observed in a LinkedIn post that there’s been no progress since both sides walked away, lots of finger pointing though.

“If a deal is going to be reached by the Aug 1 deadline the union needs time to review, vote (although everyone will vote from home) and ratify the terms which essentially makes this week the final week for meaningful progress,” he said., “Next week will have UPS scrambling to prep for a strike while their negotiation team will likely throw Hail-Mary’s to avoid the disaster.”