UPS Averts Strike, Leads to Tentative Five-Year Contract

UPS Strike Averted

The United Parcel Service narrowly avoided a worker strike last month when employees and the company reached a handshake agreement.

In June, UPS workers represented by the Teamsters union members were in negotiations to replace their existing five-year contract due to expire July 31. Employees voted overwhelmingly to authorize a strike which could have been detrimental to the shipping industry for as long as the picket lines lasted.

Fortunately for UPS and shipping-based companies, the Teamsters union and the company reached a tentative deal that will become official after a vote of the company’s 250,000 union workers. The tentative agreement addresses worker concerns about weekend delivery, wage increases and the threat of jobs replaced by new technologies, all of which speak to the current state of the industry.

Shippers should note that this contract is not finalized yet. Union leaders and the company are still discussing local work rules, such as time off procedure and job preferencing. Still, UPS Spokesperson, Matthew O’Connor said, “the handshake agreement represents strong progress toward what we believe will ultimately be finalized agreements that meet the needs of all parties involved.”

It’s also a stark reminder of how much power employees have in shipping. The new UPS contract covers a quarter of a million employees who deliver about 20 million packages and documents per day.

Even a one-day interruption in that work would upend package delivery for thousands of businesses and customers.

How carriers respond to their employees affects how well they can service shippers’ demands. Shippers need to keep an eye on companies’ internal dealings so they can make sure their work gets done.

Changes to Weekend Delivery Work

Since UPS introduced standard Saturday delivery in April 2017, full-time employees have been worried about being forced to work weekends or overtime shifts.

The tentative deal creates a new category of workers called “combination drivers” who will cover about 25 percent of the total number of delivery drivers. This designation is meant to generate more full-time jobs for part-time employees. In brief, the highest-paid regular drivers will have first dibs on weekend shifts, but they’ll be last in line when drivers are forced to work weekends.

Saturday delivery has only been UPS’s standard for a year, but the company says customers are also asking for Sunday delivery. UPS’s competitors are looking for ways to meet that demand.

Amazon has flooded warehouses with packages for two-day delivery. Now, the e-commerce giant is creating its own package delivery network which will operate seven days per week. Amazon is also offering discounted trucks, fuel, insurance and tech support to entrepreneurs who want to create their own delivery fleets which again, would work seven days per week.

“Combination drivers” opens the door for UPS to add Sunday delivery as long as there are employees willing to pick up the extra shifts, or low-level part-time workers who can be assigned to Saturday and Sunday routes.

“A key objective for UPS during our negotiations with the Teamsters union has been to reach an agreement that provides the flexibility to introduce competitive service offerings,” said UPS Spokesperson, Glenn Zaccara.

How UPS Will Implement New Technology

Another key provision in the Teamsters union contract requires that UPS give workers six months notice before implementing emerging technologies like drones and driverless vehicles.

UPS and the Teamsters union will now meet three times per year to review technologies the company is considering to implement. If technology arises with less than six months notice, UPS must give employees notice as soon as possible before putting into action.

This won’t keep UPS from moving toward driverless trucks and more fully automated warehouses, and it doesn’t guarantee jobs for the 250,000 employees covered by the agreement after these changes take place. But it ensures that they know what’s coming and when.

What is the Next Step for UPS Contract Negotiations?

The tentative agreement between UPS and union representatives still needs to be ratified by a majority of the 250,000 union workers it affects. That vote is expected sometime in July. If the deal takes effect, it will remain in place for five years until July 2023.

By that time, the delivery landscape may have changed dramatically. Amazon could be operating a full-service fleet. Same-day delivery, seven days a week, could be made possible by drones and near-fully-automated fulfillment services. Trucks may only need drivers for a few more years.

At the same time, UPS will probably be delivering far more than its current 20 million packages per day.

For now, shipping-based companies—whether they work with UPS or not—should be motivated by this near-strike to review their Plan B. What would you do if your carrier suddenly had a work stoppage and couldn’t fulfill shipments? Are the pieces in place for you to execute that emergency plan?

Second, the issues workers identify within the shipping industry will affect everyone in the business. That includes shippers. Automation technologies will save carriers a lot of money. Are those savings being passed on to your company? Are you able to take advantage of Saturday delivery?

For now, the United Parcel Service and its employees will continue delivering millions of packages daily. But it’s wise for shippers, workers and executives alike to plan with an eye on the issues workers raised here, and to consider what these contract negotiations might look like in 2023.


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