UPS moves closer to strike after Teamsters contract talks break down
WASHINGTON – The Teamsters said strike preparations are moving into “high gear” after contract talks with UPS broke down early Wednesday, deepening a rift that could have far-reaching implications for the economy.
The marathon negotiations, which stretched through the July Fourth holiday, dissolved with each side accusing the other of abandoning the effort. In a statement, the International Brotherhood of Teamsters said UPS walked away from the table around 4 a.m. after saying it had “nothing more to give.” The company’s offer had been rejected by the union’s bargaining committee.
“This multibillion-dollar corporation has plenty to give American workers – they just don’t want to,” Teamsters General President Sean O’Brien said in a statement. “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”
But UPS contends it was the union that stopped negotiating, noting there is still nearly a month left to iron out a contract before the current one expires July 31. “We have not walked away, and the union has a responsibility to remain at the table,” the company said in an unsigned statement.
It’s the latest labor conflict to threaten a pillar of the nation’s transportation ecosystem. A nearly yearlong dispute over pay and automation led to intermittent shutdowns this year at several West Coast ports, disrupting trade pathways from Asia even though workers were never officially on strike. Last year, President Biden had to intervene to avert a walkout among railway workers.
UPS and such rivals as FedEx, DHL and the U.S. Postal Service are ever-present arteries of global trade. Roughly 6% of the country’s gross domestic product moves each year through the package delivery giant, known for its distinctive brown trucks.
Last month, union members voted overwhelmingly to authorize a strike. Teamsters leaders have said they won’t work beyond the expiration of their current contract.
As of early Wednesday morning no new talks were being planned, according to a statement from the union, which represents 340,000 workers. Later in the day, the company released video showing workers marching in “practice picket lines” and said strike preparations are “shifting into high gear.”
The National Retail Federation, a trade group representing retailers, urged the two side to resolve their differences before the holiday shopping season.
“The negotiating parties had been close to reaching a final deal,” said Jonathan Gold, the NRF’s vice president of supply chain and customs policy. “We strongly urge them to return to the negotiating table and resolve the last remaining contract issues.”
Neither side has been willing to release details of the company’s latest offer, and it’s unclear what specifically remains to be worked out. On Monday, the union noted that the two sides had “met several times over the course of the day to discuss outstanding economic issues, like higher wages for full- and part-time Teamsters and pension increases.”
The union has criticized the pay increases the company presented in earlier rounds of talks, which they say don’t keep up with the cost of living for part-time workers, especially. Company drivers make $95,000 a year on average, and part-timers earn $20 an hour on average after 30 days.
The two sides have tentatively reached agreements on several points, including one to equip new vehicles with air conditioning, and on terms that would prevent the installation of driver-facing cameras. UPS also agreed to get rid of the two-tiered wage system that had been a sticking point in early discussions, according to a Saturday statement from the Teamsters.
The negotiations come as UPS faces declining revenue following three years of rapid growth. The company reported first-quarter revenue of $22.9 billion, down 6% from last year. Operating profit fell 21.8% to $2.5 billion.
It has deep-pocketed rivals investing deeply in expanding their logistics networks. The Postal Service is embarking on a $9.6 billion plan to electrify its fleet over the next five years with 66,000 new delivery vehicles, for example. FedEx, which has a non-unionized workforce, might see any disruption in UPS service as an opportunity to expand its customer base. Both companies face declining demand amid softening retail sales and a global economic slowdown.
Even a brief walkout could carry a staggering cost for the company. When some 185,000 UPS workers went on strike for 15 days in 1997, the work stoppage cost the company hundreds of millions of dollars in revenue.
UPS shares shed 2.1%, closing Wednesday at $179.97. It has a market value of $158 billion.