More than 300,000 workers at United Parcel Service Inc. are on the brink of going on strike after the company failed to reach an agreement with the International Brotherhood of Teamsters, threatening to disrupt the U.S. supply chain if this month no agreement is reached.
Weeks of talks between UPS and the Teamsters broke down in Washington early in the morning of July 5 after dragging on through the July 4 holiday, and just after 4 a.m. beleaguered negotiators emerged and said the talks had stalled.
The two sides quickly argued over who was responsible for the collapse.
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“This billionaire corporation has a lot to offer American workers — they just don’t want it,” Teamsters President Sean O’Brien said in a statement. “UPS had to make a decision and they clearly chose to go down the wrong path.”
In a statement, UPS spokesman Malcolm Berkley said it was the Teamsters who dropped negotiations despite a generous salary offer from the company.
“We have not given up and the union has a responsibility to stay at the negotiating table,” Berkley said.
UPS shares fell 2.4% to $179.45 as of 9:35 am on July 5 in New York. The stock is up about 3.2% in 2023.
There is still time to reach an agreement. The current labor contract — the largest private union contract in the US with 330,000 workers — expires at the end of July 2023, but union leaders have said they need a few weeks to educate their members and persuade them to ratify the deal. Union employees will not work beyond July 31, 2023, when the current contract expires, Teamsters spokeswoman Kara Deniz said. No further negotiations are currently planned.
The high-risk negotiations had faltered for several days, with the Teamsters leaving the negotiating table, insisting a strike was imminent, but then returning. They then reached an agreement with UPS to scrap a two-tier pay system that the union says underpaid part-time drivers.
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Ultimately, however, the two sides could not agree on major issues related to increases in wages and the cost of living. According to UPS, full-time delivery drivers make $95,000 a year, while semi-trailer drivers typically make a six-figure amount. But the Teamsters say wages haven’t kept pace with the profits the company has reaped during the COVID-19 pandemic — or matched the risk workers faced delivering packages.
hard talk
UPS faces difficult headwinds as demand for packages falls and customers seek to reclaim the surcharges and price hikes that couriers have generously levied during the pandemic. Market weakness has forced one of UPS’s biggest competitors, FedEx Corp., to make efforts to reduce costs by $4 billion by fiscal 2025 and achieve additional savings of $4 billion by fiscal 2027 by restructuring its networks Achieving $2 billion.
On the Teamsters side, the talks were led by O’Brien, who advocated taking a tougher stance on UPS than his predecessor, James P. Hoffa. He made good on that promise in the talks by publicly insulting the company and essentially challenging its executives to expose his bluff.
The potential strike is contributing to a spate of labor unrest in the transportation sector in recent years, with a backlog at ports leading to a protracted dispute with West Coast dockers and Congress set to intervene in 2022 to prevent a nationwide rail strike.
