Will UPS Go On Strike?
As the calendar inches closer to a July 31 expiration of the collective bargaining agreement between the United Parcel Service (UPS) and the International Brotherhood of Teamsters (IBT), the parcel industry is beginning to ask the question, will UPS go on strike?
In my view, it's highly unlikely. UPS is simply too profitable and has too much to lose to allow a labor dispute with the IBT to occur. But then again, I incorrectly said the same thing in 1997 prior to the eventual strike that shut UPS down for 15 days.
At issue are differences over two master labor agreements set to expire at the end of July: one, the 2008-2013 UPS National Master Agreement for small parcel that covers approximately 250,000 IBT members and, two, the 2008-2013 UPS Freight Agreement which impacts about 13,000 workers.
Although the two sides began negotiations 10 months early and progress has reportedly been made, a deal hasn't yet been reached. In each of the past two negotiations (2002 and 2008), a deal was reached well before the existing agreements expired.
What's the status of contract negotiations, on what issues do the sides remain far apart, and when is resolution expected? While UPS won't discuss the substance of what's said at the negotiating table, it has confirmed that progress is being made, the relationship is a positive one, and it fully believes an agreement will be reached prior to the expiration of the existing contract. IBT, for its part, has provided regular updates on its website every few weeks.
Clearly, the 10-month head start to negotiations has led to early progress. Initial negotiations have centered mostly on "noneconomic" issues. Primary IBT issues and concerns include the following:
- limiting UPS's ability to subcontract or use non-IBT supervisors for union work;
- allowing union employees to accumulate discretionary days;
- giving part-time union workers the opportunity to move into full-time work;
- concerns regarding work conditions and health/safety issues;
- excessive overtime for drivers that work nine-and-a-half hours on three days in one workweek;
- "harassment" issues, including nonunion UPS supervisors riding with union drivers that file grievances; and
- protecting Teamster jobs threatened by the growth of UPS SurePost, a parcel product in which lightweight, low-value residential packages are tendered to the U.S. Postal Service for "final mile" delivery.
The two sides have reportedly reached tentative agreements on many of these noneconomic issues, although a source stated the harassment issue is still being hotly negotiated.
More recent labor talks have involved "economic" matters including pensions, health care and wages.
What does UPS want? Again, UPS has a long-standing policy of not negotiating union agreements through the media. Therefore, while UPS is publicly short on describing substantive issues, it's repeatedly stated that it simply wants a good contract that rewards its employees while allowing UPS to be flexible and competitive in the marketplace.
Both sides remain far apart on health insurance. In recent bargaining sessions, UPS gave Teamster negotiators a presentation supporting its position that workers should share some of the burden of escalating health care costs. While IBT officials committed to working hard to identify creative solutions, Ken Hall, IBTs’ general secretary, treasurer and package division director, drew a line in the sand by declaring his goal that "Teamsters at UPS (and UPS Freight) don't pay a cent towards their health insurance."
IBT also proposed significant wage and pension increases, in particular to starting wages for part-time workers. According to a document posted on its website, Teamsters for a Democratic Union, the starting wage for all UPS part-timers, other than sorters and pre-loaders, has been frozen at $8.50/hour since 1987.
However, it's unlikely that much progress can be made on wages and other economic proposals until both sides have come to terms on health care.
While both sides have stated the goal of reaching a tentative agreement by the end of March, the debate on health care costs has proved more complex than initially believed, slowing progress. Negotiations are reportedly scheduled through this week, but are likely to break off before resuming at some point in April.
Once a handshake agreement has been reached, IBT and UPS will make a public announcement. IBT will then send the contract to UPS Teamster-represented employees for approval and ratification, which can take several weeks.
FedEx has reportedly met with many volume UPS shippers letting them know it will not accept new customers should UPS workers strike, and that if shippers want to shift from UPS to FedEx, now is the time.
However, as reported in Wolfe Trahan's State of Freight first quarter 2013 shipper survey results, 82 percent of shippers said they have no plans to shift parcel volumes to FedEx during IBT/UPS contract negotiations. If a tentative agreement hasn't been reached by the end of March, Wolfe Trahan expects to see an acceleration of volume shifts to alternate providers, including FedEx, USPS and regional parcel carriers.
Rob Martinez is the CEO of Shipware LLC, a professional services firm that transforms businesses through intelligent distribution solutions and strategies. Rob has helped some of the world’s most recognizable brands reduce parcel shipping costs an average of 25 percent through contract negotiations, rate benchmarking, modal optimization, invoice audit and other savings vehicles. A cum laude graduate of UCLA, Rob has 20 years of transportation industry experience, including executive positions at DHL and Stamps.com, in addition to his work as an outside consultant since 2001.