By HALLELUJAH HADERO (AP Business Writers)
NEW YORK (AP) — UPS has reached a tentative contract agreement with its strong union of 340,000, potentially averting a strike that threatened to disrupt logistics across the country for businesses and homes alike.
The deal was announced after UPS and the Teamsters returned to the negotiating table Tuesday to discuss the remaining sticking points in the largest private sector contract in North America. The two sides had already reached a tentative agreement on a number of issues, but continued to disagree on things like pay for part-time workers who make up more than half of union-represented UPS employees.
The Teamsters called the tentative deal “historic” and “overwhelmingly lucrative” in a prepared statement. It includes, among other benefits, higher wages and air conditioning in delivery trucks.
“Together we reach a win-win-win agreement on the issues that are important to Teamsters leadership, our employees, and to UPS and our customers,” Carol Tomé, UPS CEO, said in a written statement. “This agreement continues to reward full-time and part-time UPS employees with industry-leading wages and benefits, while retaining the flexibility we need to remain competitive, serve our customers, and maintain the strength of our business.”
The company said the five-year agreement covers USA Teamsters-represented employees in small package roles and is subject to a vote and ratification by union members.
The union, which had long threatened a strike, boasted of “historic wage increases” for its members and said full-time and part-time UPS Teamsters will receive $2.75 more per hour in 2023 and $7.50 more per hour for the life of the contract.
He said the agreement includes a provision to increase the starting wage for part-time workers to $21 an hour, up from $16.20 currently. He also reiterated previous concessions he’s won from the company, such as making Martin Luther King Day a full holiday for the first time and ending forced overtime on drivers’ days off.
The Teamsters members, angered by a contract they say was forced on them five years ago by union leaders, have clashed with UPS over wages as the delivery company’s profits have soared in recent years. Union leadership changed last year with the election of Sean O’Brien, a vocal critic of the union president who signed that contract, James Hoffa, the son of the famed Teamsters firebrand.
The two sides had reached a tentative agreement early on safety issues, including equipping more trucks with air conditioning equipment. Under the agreement, UPS said it would add air conditioning to small US delivery vehicles purchased after January 1, 2024.
Profits at UPS have grown more than 140% since the last contract was signed, as the arrival of a deadly pandemic dramatically transformed the way households get what they need.
Union workers argued that they were the ones taking over growth at the Atlanta company and seemed intent on fixing what they saw as a bad contract.
The 24 million packages UPS ships on an average day account for about a quarter of all US package volume, according to global shipping and logistics firm Pitney Bowes. As UPS says, that’s the equivalent of about 6% of the nation’s gross domestic product.
Member voting begins on August 3 and ends on August 22.
UPS has the largest private sector contract with workers in North America and the last breakdown in labor negotiations a quarter of a century ago led to a 15-day strike by 185,000 workers that brought the company to a standstill.
If a strike were to occur, logistics experts had warned that other shipping companies would not have had the capacity to handle all the packages that would flow their way. Customers who buy online may have faced more shipping fees and longer wait times.
The deal averts a major shipping crisis just as merchants were in the midst of back-to-school shopping season, the second-biggest sales period after winter holidays.
The Retail Industry Leaders Association, a national retail trade group that counts retailers such as Best Buy, CVS Health and Kohl’s as members, called the tentative agreement “a huge relief for retailers, who have been navigating the possibility of a strike and the associated uncertainty for weeks.”
“We have learned very well in recent years the impact that supply chain disruptions can have,” the group said in a statement. “We are grateful that this challenge, which would have come at a multi-billion dollar price tag and a long road to recovery, has been averted.”
Matt Ott contributed to this report from Washington, DC, and Anne D’Innocenzio contributed from New York City.