US Chamber of Commerce: Will deliveries be delayed?

Published 7:07 am Friday, July 21, 2023

The United Parcel Service (UPS) and International Brotherhood of Teamsters (Teamsters) are in the final stages of negotiating a new, long-term collective bargaining agreement for approximately 340,000 UPS employees. These negotiations will establish compensation, benefits, work hours and conditions for several years, so while both sides report significant progress in reaching an agreement, it is not unusual for talks to become strained before a deal is reached.

Most Recent Developments

Recently, the Teamsters announced they would resume contract negotiations with UPS, beginning the week of July 23rd. Like last year’s rail negotiations, UPS will be forced to prepare for a potential strike in the coming days, meaning our nation’s communities, businesses, and local governments will soon see service disruptions before the “official” August 1 date that a strike could begin. This makes it incredibly important for both sides to reach a deal as soon as possible to avoid any potential service disruptions to the American public, which is why the Chamber led a coalition letter of more than 250 organizations and State and local chambers calling on the administration to intervene in the negotiations.

Background

UPS is one of the world’s largest package delivery companies and a leading provider of global supply chain management solutions, including a variety of transportation, distribution, logistics, and customs services. Every day UPS moves approximately 5% of the nation’s GDP – or roughly $3.8 billion of goods.

Important to performing this work are the approximately 340,000 UPS package car drivers, feeder drivers, loaders, sorters, clerks, and others, who are represented by the Teamsters. Indeed, UPS is the single largest employer in the Teamsters union.

The current contract, which expires on August 1, 2023, is unpopular with the new Teamsters’ leadership – Sean O’Brien, the Teamsters’ new president, promised to reverse several of its provisions as part of his campaign for the union’s top post.

Despite this, both sides have reported productive discussions since negotiations began in April to negotiate a new agreement. In late June, Mr. O’Brien expressed optimism to reach a new agreement by early July. To date, both sides have reached tentative agreements on 55 issues – which includes virtually all of Mr. O’Brien’s stated priorities such as installing new heat safety measures for UPS vehicles, the use of technology, prohibiting in-vehicle cameras, and eliminating the “22.4 drivers” (also known as “combo drivers”) classification. This leaves a handful of issues to resolve.

In recent days, news reports show heightened rhetoric by the Teamsters, including demands for a “last, best, and final offer,” and walking away from the negotiating table. While these actions are cause for concern, they are not unexpected. Historically, contract negotiations can become more heated during discussion of the most important items. Further, it is important to remember that the current contract remains in place until August 1. As long as a contract is in place the Teamsters may not legally strike, meaning time remains to negotiate.

Impact to Small Businesses and Consumers

Small businesses are especially reliant upon UPS and its competitors for timely deliveries of everything from financial products, critical medical supplies, agricultural equipment, baby formula, semiconductors, school supplies, and other critical business goods.

If a worker strike were to occur, the nearly 4 million small-and medium-sized small businesses who count on UPS to deliver their products will be impacted. We’ve unfortunately seen this before during the strike in 1997, with one CNN article reporting “The strike has snarled package delivery service across the country, affecting thousands of businesses, large and small.” And another saying, “The strike has sent 185,000 workers to the picket line and slowed delivery of millions of packages.”

Small businesses have made a remarkable comeback since the pandemic, with the number of applications to start new companies recording a 53% jump from pre-pandemic levels. Small businesses also represent 43.5% of gross domestic product, or 99.9% of all U.S. businesses.

Consumers and businesses of all sizes are counting on both sides to remain at the table and reach an agreement that avoids a strike at all costs.

A Broader Look

The UPS-Teamsters negotiation is the latest labor negotiation to capture the nation’s attention. Last year, the six largest freight railroads reached an agreement with their twelve unions only after the threat of a national rail strike and the direct intervention of the Biden Administration and Congress. More recently, the West Coast port terminals reached an agreement with the International Longshore and Warehouse Union (ILWU) following a year of negotiations and service stoppages and immediately after the Chamber called for President Biden to directly intervene in helping finalize the negotiation.

Just like with the current UPS-Teamsters negotiations, rhetoric was heated in these two negotiations, especially towards the end.

Bottom Line

UPS and its workers are incredibly important to our economy and the business community. For 100 years, UPS has collaborated with the Teamsters to provide industry leading pay & benefits for their employees, while achieving industry-leading marks on safety and on-time-performance.

While the Teamsters have increased their rhetoric in recent days, it’s important that both sides stay at the negotiating table for the sake of not just UPS and the Teamsters rank and file, but for U.S. businesses and consumers.

About the authors

John Drake

John Drake

John Drake is vice president for transportation, infrastructure, supply chain policy at the U.S. Chamber of Commerce, the world’s largest business advocacy organization. In his role, Drake is responsible for representing the business community on transportation, infrastructure, and supply chain issues before Congress, the administration, the media, the business community, and other stakeholders. Drake is also a member of the Commercial Customs Operations Advisory Committee, which advises the U.S. Customs and Border Protection on improvements to U.S. trade.