As has been widely covered, shipping costs continue to rise. Beyond the pressures arising from increased reliance on eCommerce for shopping and a dearth of qualified drivers, ongoing contract negotiations between the largest union of drivers, The Teamsters, and UPS are poised to have direct and serious impacts on shipping costs.
While there seem to be some internal conflicts with The Teamsters during these negotiations, an overall picture of how the negotiations are going has begun to emerge.
The biggest development coming out of these negotiations? There seems to be indications of a new way to increase weekend shipping and get more drivers on the road.
There are ongoing discussions regarding two-tiered system for driver’s wages, enabling UPS to take on lower-paid workers to deliver packages throughout the weekend. Currently, UPS drivers work Monday through Friday and get paid overtime for delivering on weekends. You could see why this type of change might create some dissent within The Teamsters.
With this new pay system, UPS would be able to provide regular Sunday deliveries – something that is currently dominated by the United States Postal Service.
What might this mean for shippers?
Basic economics tells us that greater competition is usually followed by a drop in price. As such, it’s entirely possible that this move could decrease price and enable increased capacity for shipping.
Increased Starting Wages for Part-Time Workers
There has been a significant push within the rank and file of UPS drivers for an increase in salary, particularly starting salaries. The word coming out of negotiations is that drivers are looking for a $15 an hour starting salary for drivers and an additional $5 for existing drivers.
This move would potentially have the opposite effect, increasing costs that may very well be passed on to shippers. However, increased starting salaries are also likely to attract more drivers and alleviate the scarcity of drivers on the road.
It should be noted that UPS share value has increased 20% over the last year. These earnings have emboldened the rank and file of the Teamsters to push even harder for greater benefits and increased wages. The fighting between the rank and file Teamsters and their leadership has begun to reverberate louder in the last few months.
The “Hybrid” wage model of having two-tiers of drivers, ones that work during the week and others that drive on weekends, has been a source of particular displeasure. The reasons for this is that, under the current model, drivers make a significant amount of money on overtime pay if they choose to drive on Sundays. Sometimes this could be up to $75 an hour.
The truth is, the rank and file at UPS have far more leverage than it seems their leaders are using in these negotiations. Given the soaring reliance on shipping, drivers have a lot of bargaining power. Within this environment, it would make sense for the Union to push very hard for better benefits and better wages for drivers. Not only because drivers play such an important role, but the need for larger fleets of qualified drivers.
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