Will UPS Go On Strike?

By Rob Martinez, DLP, CMDSS, President and CEO, Shipware LLC

As the calendar inches closer to a July 31 expiration of the collective bargaining agreement between
United Parcel Service (UPS) and the International Brotherhood of Teamsters (IBT), the parcel industry is
beginning to ask the question, will UPS go on strike?

In my view, it is highly unlikely. UPS is simply too profitable and has too much to lose to allow a labor
dispute with the IBT to occur. But then again, I incorrectly said the same thing in 1997 prior to the
eventual strike that shut UPS down for 15 days.

At issue are differences over two master labor agreements set to expire at the end July 2013: (1) The
2008-2013 UPS National Master Agreement for small parcel that covers approximately 250,000 IBT
members; and (2) The 2008-2013 UPS Freight Agreement which impacts about 13,000 workers.

Although the two sides began negotiations ten months early and progress has reportedly been made, a
deal has not yet been reached. In each of the past two negotiations (2002 and 2008), a deal was
reached well before the existing agreements expired.

What’s the status of contract negotiations, on what issues do the sides remain far apart, and when is
resolution expected?

While UPS will not discuss the substance of what is said at the negotiating table, UPS has confirmed that
progress is being made, the relationship is a positive one, and it fully believes an agreement will be
reached prior to the expiration of the existing contract. IBT, for its part, has provided regular updates on
its website (www.teamster.org) every few weeks.

Clearly, the 10-month head start to negotiations has led to early progress. Initial negotiations have
centered mostly on “non-economic” issues. Primary IBT issues and concerns are:

• Limiting UPS’s ability to subcontract or use non-IBT supervisors for union work;
• Allowing Union employees to accumulate discretionary days;
• Giving part-time Union workers the opportunity to move into full-time work;
• Concerns regarding work conditions, and health/safety issues;
• Excessive overtime for drivers that work 9.5 hours on three days in one work week;
• “Harassment” issues, including non-union UPS supervisors riding with Union drivers that file grievances;
• Protecting Teamster jobs threatened by the growth of UPS SurePost, a parcel product in which lightweight, low value, residential packages are tendered to the US Postal Service for “final mile” delivery.

The two sides have reportedly reached tentative agreements on many of these non-economic issues,

although a source stated the harassment issue is still being hotly negotiated.

More recent labor talks have involved “economic” matters including pensions, health care and wages.

What does UPS want? Again, a long standing policy of UPS is not to negotiate union agreements

through the media. Therefore, while UPS is publically short on describing substantive issues, it has

repeatedly stated that it simply wants a good contract that rewards its employees while allowing UPS to

be flexible and competitive in the marketplace.

Both sides remain far apart on health insurance. In recent bargaining sessions, UPS gave Teamster

negotiators a presentation supporting their position that workers should share some of the burden of

escalating healthcare costs. While IBT officials committed to working hard to identify creative solutions,

Ken Hall, Teamster’s General Secretary-Treasurer and Package Division Director drew the line in the

sand by declaring his goal is that “Teamsters at UPS (and UPS Freight) don’t pay a cent towards their

health insurance”.

IBT also proposed significant wage and pension increases, in particular to starting wages for part time

workers. According to a document posted on its website, Teamsters for a Democratic Union (TDU), the

starting wage for all UPS part-timers, other than sorters and pre-loaders, has been frozen at $8.50/hour

since 1987.

However, it is unlikely that much progress can be made on wages and other economic proposals until

both sides have come to terms on healthcare.

While both sides have stated the goal of reaching a tentative agreement by the end of March, the

debate on healthcare costs has proved more complex than initially believed, and it has slowed progress.

Negotiations are reportedly scheduled through next week, but are likely to break off before resuming at

some point in April.

Once a handshake agreement has been reached, IBT and UPS will make a public announcement. IBT will

then send the contract to UPS Teamster-represented employees for approval and ratification, which can

take several weeks.

FedEx has reportedly met with many volume UPS shippers stating that they will not accept new

customers should UPS workers strike, and that if shippers wanted to shift business from UPS to FedEx,

now is the time.

However, as reported in the Wolfe Trahan “The State of Freight” first quarter 2013 shipper survey

results, 82% of shippers said they have no plans to shift parcel volumes to FedEx during IBT/UPS contract

negotiations. If a tentative agreement has not been reached by the end of March, Wolfe Trahan expects

to see an acceleration of volume shifts to alternate providers including FedEx, US Postal Service and

regional parcel carriers.

Rob Martinez, DLP is President & CEO of Shipware LLC, a parcel auditing and consulting company based in San Diego, CA. He welcomes questions and comments and can be reached at rob@shipware.com.