Friday July 7th, 2023

The contract negotiations between UPS, Inc. & the Teamsters collapsed on Wednesday morning in a statement issued by Teamsters.  After months of anticipation, both companies have held their stance in what appears to be an obstructed intersection.  Although UPS had agreed to a new two-tiered driver’s compensation package, including the conversion of their lower ranking drivers to be equal to their senior colleagues, Teamsters General President Sean M. O’Brien expressed disappointment, saying “UPS had a choice to make, and they have clearly chosen to go down the wrong road.”

In late June, UPS indicated they were working around the clock to reach an agreement “that strengthens our industry-leading pay and benefits ahead of the current contract’s expiration on August 1st.”   It is obvious now that UPS’ “table-ready approach,” has been unsuccessful.  The current contract covers over 330,000 UPS employees.  To give some context, during the 1997 strike involving Teamsters and UPS, UPS had 185,000 Teamsters employees and the strike lasted for three weeks before service disruptions ceased.

While overall parcel numbers have been far from volumes during COVID, 2023 has presented its own set of challenges with industry rival FedEx Express.  From a volume perspective, FedEx Express handles about one-third of the parcel capacity that UPS has historically dominated.  Therefore, if UPS does not reach an agreement on or before July 31st, our country is going to witness another black swan event, only this time, with far-reaching consequences.

As always, the Scarbrough Group will continue to monitor and report the unfolding actions of both UPS & the Teamsters.