UPS Inc. has reached a deal with the International Brotherhood of Teamsters union group for its 340,000 members, avoiding the risk of a strike.
The strike that would have occurred should a deal not been made would have nationwide effects on the economy and overall business logistics.
On July 3, we reported that UPS had agreed to remove their two-tier wage system but ultimately the union rejected the company’s proposal, stating it was not the last, best, and final offer, “telling the union the company had nothing more to give,” said Union General President Sean M. O’Brien.
On July 19, UPS and IBT announced in a joint statement that contract negotiations between the two parties will commence again.
According to Michigan State University Associate Professor for Supply Chain Management Jason Miller, UPS transports roughly 25 million packages daily.
This accounts for 6% of the United States GDP, including vital economic sectors such as healthcare, apparel, spare motor vehicle parts, and electronic components.
Miller goes on to say that due to the volume of work UPS conducts, other carriers like FedEx and DHL would struggle to take on work of that capacity.
The union group called this deal “historic” and “overwhelmingly lucrative” in a prepared statement. It includes, among other benefits, higher wages and air conditioning in delivery trucks.
“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,” Carol Tomé, UPS chief executive officer, said in a written statement. “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.”
According to UPS, the five-year contract covers U.S. Teamster-represented employees in small-package roles and is subject to voting and ratification by union members.
Wages was a big topic of discussion at the negotiation table, the ultimate result of this is a $2.75 per hour increase in 2023, and $7.50 per hour over the course of the five-year contract.
Starting pay for part-time workers also saw an increase from $16.20 per hour to $21 per hour, a nearly 30% increase.
Part of the agreement is that UPS would add air conditioning to U.S small delivery vehicles purchased after January 1, 2024.
Since the last time a contract was signed, UPS profits have grown more than 140% and union workers felt their work was not being appreciated.
The Retail Industry Leaders Association, a national retail trade group that counts retailers like Best Buy, CVS Health and Kohl’s as members, called the tentative pact “an enormous relief to retailers, who have been navigating the possibility of a strike and the associated uncertainty for weeks.”
“We’ve learned all too well over the last several years the impact supply chain disruptions can have,” the group said in a statement. ”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.”
