UPS employees authorize Teamsters Union to declare strike

United Parcel Service employees have authorized their union, the International Brotherhood of Teamsters, to declare a strike on August 1, after the current contract expires, the Teamsters announced on Friday.

The Teamsters represent more than 325,000 UPS employees in the United States, where the company has a total of nearly 450,000 employees. The union said 97 percent voted in favour of strike power.

Many unions have such votes to exert influence at the negotiating table, but a much smaller percentage ultimately follow through. “The results do not mean that a strike is imminent and do not affect our current business operations in any way,” UPS said in a statement, adding that it was “confident that we will reach an agreement.”

A UPS strike can have significant economic consequences. According to the Pitney Bowes Parcel Shipping Index, the company handles about a quarter of the tens of millions of packages shipped every day in the United States. And while competition from UPS has increased in recent years, rivals would struggle to quickly replace that lost capacity, leaving some customers in the lurch and others facing higher costs.

“What happens if you try to cram 25 percent more food into a stomach that’s 90 percent full?” said Alan Amling, a fellow at the University of Tennessee’s Global Supply Chain Institute and a former UPS executive.

The two sides have reached tentative agreements on a number of issues since they began negotiating a national contract in April, most recently on heat safety, including a requirement for air conditioning in new trucks from January and extra fans and ventilation for existing trucks.

But negotiators have yet to address the pay raises, which the Teamsters say are overdue amid the company’s strong performance during the pandemic. The company’s adjusted net income increased more than 70 percent from 2019 to last year.

The union has also focused on reviewing wage differentials for a category of drivers who typically work weekends.

So said UPS CEO Carol Tomé, who started in that position in 2020 call income that UPS agreed with the union on “several important issues”. She added that outsiders should not place too much weight on the “much noise” likely to arise during the negotiations.

The talks highlight the political stance of Teamster leader Sean O’Brien, who repeatedly accused his predecessor, James P. Hoffa, of being overly conciliatory to employers during his campaign for the 2021 union presidency.

Mr O’Brien complained that Mr Hoffa essentially forced a concession contract on UPS employees in 2018 after union members voted against the deal. He criticized his opponent for the presidency, a candidate affiliated with Hoffa, as unlikely to strike.

“You’ve already admitted you’ve only struck six times in your 25-year career, so UPS knows you’re not going to strike,” said Mr. O’Brien during a candidate debate.

Mr. O’Brien has largely maintained his aggressive stance on UPS since becoming president last year. Speaking in October to activists from Teamsters for a Democratic Union, a reformist group that supported his candidacy, Mr. O’Brien that “this UPS agreement will be the defining moment in organized labor.”

Compensation for UPS drivers is generally higher than that of the company’s competitors. UPS said the average full-time delivery driver with four years of experience earns $42 per hour, and part-time workers who sort packages after 30 days earn an average of $20 per hour.

The groups receive the same benefits package, which includes health care and pension contributions and is worth about $50,000 a year for full-time drivers, the company says.

In addition to general wage levels, the union has said it wants to eliminate a category of drivers created under the 2018 contract.

The company said the category was for hybrid employees who perform tasks such as sorting packages on some days while driving on others, especially Saturdays, to meet growing demand for weekend deliveries.

But the Teamsters said these workers never followed the hybrid arrangement and simply drove full-time from Tuesday to Saturday, for less pay than other full-time drivers. The company says its weekend drivers earn about 87 percent of the base salary of regular full-time drivers and some employees have worked under a hybrid scheme.

In the event of a strike, consumer deliveries, such as e-commerce orders, are likely to be among the first to be disrupted. But experts said the supply chain could also suffer. Some suppliers would struggle to ship goods such as auto parts quickly to manufacturers, potentially causing production delays.

Even a brief strike can take its toll on UPS. For a long time, many customers relied solely on the company, but that began to change after the Teamsters last went on strike in 1997, said Mr. Amling. After that strike, which lasted just over two weeks, more customers started working with multiple carriers. The fallout was masked by benefits from the rise of e-commerce and fewer competitors to choose from, but the company may not be so lucky today.

Niraj Chokshi reporting contributed.