UPS reaches tentative contract with 340,000 unionized workers potentially dodging calamitous strike

UPS has reached a contract agreement with its 340,000-person strong union Tuesday, averting a strike that had the potential to disrupt logistics nationwide for businesses and households alike.

The agreement was announced after UPS and the Teamsters came back to the negotiating table Tuesday to talk over remaining sticking points in the largest private-sector contract in North America. Both sides had already reached tentative agreement on a host of issues but remained at odds on things like pay for part-time workers who make up more than half of the UPS employees represented by the union.

The Teamsters called the tentative agreement “historic” and “overwhelmingly lucrative” in a prepared statement. It includes, among other benefits, higher wages and air conditioning in delivery trucks.

“Together we reached 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 chief executive officer, said in a written statement. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

The company said the five-year agreement covers U.S. Teamsters-represented employees in small-package roles and is subject to voting and ratification by union members.

The union, which had long threatened a strike, boasted about the “historic wage increases” for its members, saying existing full- and part-time UPS Teamsters will get $2.75 more per hour in 2023, and $7.50 more per hour over the length of the contract.

It said the agreement includes provision to increase starting pay for part-time workers to $21 per hour, up from $16.20 today. It also reiterated prior concessions it got 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.

Members of the Teamsters, angered by a contract they say was forced on them five years ago by union leadership, clashed with UPS over pay as profits for the delivery company soared in recent years. Union leadership was upended last year with the election of Sean O’Brien, a vocal critic of the union president who signed off on that contract, James Hoffa, the son of the famous Teamsters firebrand.

The two side 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 U.S. small 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 drastically transformed the manner in which households get what they need.

Unionized workers argued that were the ones shouldering growth at the Atlanta company and appeared dead set on righting what they saw as a bad contract.

The 24 million packages UPS ships on an average day amounts to about a quarter of all U.S. parcel volume, according to the global shipping and logistics firm Pitney Bowes. As UPS puts it, that’s the equivalent of about 6% of nation’s gross domestic product.

Member voting begins Aug. 3 and concludes Aug. 22.

UPS has the largest private-sector contract with workers in North America and the last breakdown in labor talks a quarter century ago led to a 15-day walkout by 185,000 workers that crippled the company.

If a strike occurred, logistics experts had warned that other shipping companies wouldn’t have had the capacity to handle all the packages that would flow their way. Customers who shop online could have faced more shipping fees and longer waits.

The deal averts a big crisis in shipping just as merchants were in the throes of the back-to-school shopping season, the second largest sales period behind the winter holidays.

The Retail Industry Leaders Association, a national retail trade group that counts retailers like Best Buy, CVS Health and Kohl’s as members, called the tentative pact “an enormous relief to retailers, who have been navigating the possibility of a strike and the associated uncertainty for weeks.”

“We’ve learned all too well over the last several years the impact supply chain disruptions can have,” the group said in a statement. ”We’re grateful that this challenge, which would have had a price tag in the billions of dollars and a long runway for recovery, was avoided.”