The long-anticipated November 2018 election is just around the corner. As the date approaches shippers are suddenly growing concerned.
No, they’re not worried about the Democrats taking over the House or Senate - they are worried about the potential of labor unrest and the possibility of a strike as matters are quickly becoming contentious at UPS Freight. The Teamsters rejected the proposal from UPS Freight which their union leadership agreed to. Unless an agreement is reached by November 12th, the Teamsters say they will cancel a 30-day contract extension when it expires on that date. This could result in a walkout by approximately 12,000 of UPS Freight’s unionized employees. The Teamsters UPS Freight National Negotiating Committee positioned for a vote on the Last, Best and Final Offer (LBFO) by UPS Freight for a new labor contract.
However, this LBFO does little to address the issues raised by members which caused them to reject the proposed contract. UPS Freight workers have already authorized a strike if they are unable to reach an agreement by the current deadline. About 62 percent of UPS Freight employees voted down the company’s 5-year contract proposal. They were most concerned with driver subcontracting language and substandard wage increases. The proposed language establishes a two-tier wage structure for drivers.
Those drivers with less seniority would be paid, on average, $6 an hour less than their senior co-workers. If a strike were to take place it is expected that it would only impact UPS Freight operations which excludes other UPS entities that handle parcel shipments. It should be noted that while UPS parcel workers have a new agreement, there are still some side agreements that need to be worked out. This includes the Louisville airport mechanics who also rejected a UPS labor contract last month.
If they are unable to find a solution it could potentially lead to a strike that would impact UPS air operations. In our June 2018 Newsletter, we cautioned shippers that “Negotiations are continuing on a labor contract for UPS Freight workers” and “the majority of the increased labor cost will have to be funded by UPS customers” The fact that new settlement costs are not going to be fully offset by productivity improvement remains a constant. As you are preparing your 2019 budgets this is a fact that should be top of mind for shippers who have not capped their GRIs.