Update on UPS/Teamsters Negotiation: It's Complicated

Back in July, we reported that the Teamsters union and UPS had come to an agreement on a new contract.At the time, it seemed that the new contract was all but official - there wasn't any significant indication that members would not agree. However, things have changed.

Overview of Tentative Agreement in July

The tentative agreement back in July had two major aspects to it that, if finalized, would have major implications on both carriers and shippers.

Wage Increases

The initial agreement was supposed to include a $4.15 increase in wages over a 5 year period for full-time workers and a starting hourly wage of $13 an hour for part-time workers.

New Driver Classifications

As part of the agreement, a new driver classification, "Hybrid Drivers," would be created. This was a major point of contention between the union members and leadership. Hybrid Drivers would essentially take over weekend deliveries, which regular UPS workers were gaining lucrative overtime pay for.

Things Fall Apart

The vote on the new contract did not go as planned. The rank and file, at least the ones in attendance, voted down the proposal.According to the Wall Street Journal, 54.3% of voters opposed to the deal. However, only 44% of the members actually voted. As per the Teamsters' rules, a contract can only be rejected by 2/3 of ballots if less than half of the members vote. According to the union leadership:

As we saw in the 2016 U.S. Presidential, winning the popular vote does not necessarily win the election...As the Teamsters, we must too abide by the rules in our constitution.

As one would imagine, this outcome did not please the rank and file membership. Effectively, the union is now going back to the negotiating table as a show of "good faith."This outcome indicates a large rift between leadership and members within the union. However, the union has stated that an extension of the previous contract that expired in July has been put in place and, therefore, it will be "business as usual" until the new contract has been

What Happens Now?

Even though the Teamsters' leadership considered the vote passed, they are going back to the drawing board and work on re-negotiating the contract in order to get the vote to pass. Is there a potential impact on shippers? Possibly. While UPS has stated that it will be "business as usual" as the contract negotiations go back to the drawing board, there's always the possibility that the members will do something drastic, like walk out on the job. To be clear, there's no indication that that will happen. However, the one thing that any industry hates is uncertainty and this outcome creates a great deal of uncertainty. As these negotiations continue, we'll be reporting on the progress and how we see the outcomes affecting shippers.