UPS Negotiations Collapse with Teamsters Union

The union that represents nearly 340,000 UPS workers said that contract talks with the carrier collapsed early on July 5th, and both sides have accused the other of walking away from the negotiations without a deal in place.

Why UPS Negotiations Collapsed

In a series of tweets, the Teamsters Union said:

Following marathon negotiations, UPS refused to give the Teamsters a last, best, and final offer, telling the union the company had nothing more to give. “This multibillion-dollar corporation has plenty to give American workers — they just don’t want to,” said Teamsters General President Sean M. O’Brien. “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”

Meanwhile, UPS denied the union’s claims and accused the Teamsters of stopping negotiations abruptly.

Prior to the collapse in talks, the two sides had previously said there had been agreement on a number of issues. Last week, the Teamsters announced that both parties had agreed upon points such as UPS promising to start buying only air-conditioned delivery vans (UPS trucks currently don’t have air conditioning) and to retrofit its existing fleet of 95,000 vehicles with some features to reduce heat in the cargo area which poses a safety risk to delivery drivers. The Teamsters said that UPS also agreed to a tentative deal that would end a two-tiered payment system, make Martin Luther King Jr. Day an official day off, and end mandatory overtime on workers’ days off.

How Long Have UPS and the Teamsters Been Negotiating?

UPS and the Teamsters Union have been in talks since early May with the purpose of reaching a new workers’ contract. The UPS Teamsters contract covering more than 340,000 full- and part-time workers expires on July 31st, and no additional negotiations are currently scheduled. The Teamsters have said on multiple occasions that UPS members will not work beyond the expiration of the current contract.

What Happens if UPS Workers Go on Strike?

If UPS workers go on strike after July 31st, shippers who rely on UPS will need to find other alternatives for sending packages. Customers of online shipping software companies will have other options for getting packages to customers, such as buying discounted postage from USPS instead of UPS.

Since UPS consistently captures the largest share of the express and courier service markets in the United States, a UPS workers’ strike in the U.S. will result in FedEx and USPS taking on additional parcel volume. FedEx will likely see an increased share of larger, heavier packages over 70 pounds, as well as emergency deliveries. USPS, on the other hand, will see a large injection of smaller, handheld packages. This increase in package volume may strain the Postal Service’s network and cause delays in delivery, similar to when a volume surge led to USPS experiencing its worst backlog ever at the height of the Covid-19 pandemic.

The Impact of a UPS Strike in the Age of eCommerce

According to ShipMatrix, an analytics firm that works with parcel shippers, UPS was able to recapture 90% of its business once the strike in 1997 ended. However, analysts have said the company might be able to only recover 70% of its business in a strike today because business shippers and individuals have a greater number of alternatives.

In 1997, eCommerce was very much in its nascent stages. FedEx did not have a lower-cost ground service, and the U.S. Postal Service’s network wasn’t set up to handle as many package deliveries as it does now. Amazon also has its own delivery service now, which continues to capture more market share from the major carriers each year.