With less than three weeks until the current labor agreement expires, the negotiations between UPS and the Teamsters appear to be at a standstill. Both sides walked away from the table last week with no additional talks scheduled.
Based on recent statements, there are few reasons to be optimistic this will change any time soon. But both parties know any work stoppage would be devastatingly bad for UPS, its customers, and the Teamsters, so there are plenty of incentives to get a deal done. However, there’s an X factor that has nothing to do with UPS that the union has admitted is strengthening its resolve to get the best possible deal for its members.
The difficult situation presents a rare opportunity for UPS and FedEx customers to renegotiate their rates. It is a buyers’ market for parcel rates right now. Keep reading to understand why.
The state of negotiations
Teamsters President Sean O’Brien has been a frequent guest on news shows lately. Here is a recent interview with CNBC: https://www.youtube.com/watch?v=ux_ykTjyeww
His main talking points include taking issue with UPS’s extreme profitability during the pandemic and the failure of UPS employees (in particular part-time employees) to benefit from that success. According to O’Brien, UPS is overstating the actual pay rates of PT employees and misrepresenting other key pay-related facts.
UPS is less visible in the media. The following is a statement from the carrier’s website. “Refusing to negotiate, especially when the finish line is in sight, creates significant unease among employees and customers and threatens to disrupt the U.S. economy.”
For the full statement by UPS, visit its website: https://about.ups.com/us/en/newsroom/negotiations/weekly-updates-from-the-bargaining-table.html
At this point, both sides are blaming the other for the standstill. And, barring resolution by July 31, a strike is imminent, according to the Teamsters.
The X factor
The X factor we mentioned earlier could be the tipping point between a deal or no deal by the deadline. O’Brien stated in the CNBC interview that the Teamsters is very interested in unionizing Amazon and wants the UPS negotiations to serve as proof of how his organization can benefit the retailer’s many employees. So, for the Teamsters, this is about more than just UPS.
Here is a recent article on the topic: https://thehill.com/business/4082461-teamsters-ups-battle-may-be-just-a-warm-up-for-future-amazon-fight-experts-say/
What happens next?
The posturing from both sides is not surprising — but it also makes it hard to know if a new agreement will be signed without a strike.
Here is what we do know. Overall, package volume is down, and both UPS and FedEx are already battling to retain their existing parcel volumes and steal what they can from each other. The added pressure of UPS wanting to avoid losing customers simply for fear of a strike is another thing working to all shippers’ advantage. FedEx, wanting to leverage this fear, has been aggressive with its pricing of late.
As a shipper, it’s too late to move any significant volume between carriers before the end of July to avoid the service disruptions of a strike. But, the opportunity to renegotiate your small parcel contracts is always available and, for many reasons, better than ever.
TransImpact can provide a no-obligation analysis to show you what your parcel rates should be within 1/10th of 1% given the present market conditions and give you a plan to negotiate your new contract. Email info@transimpact.com to get started.