United Parcel Service workers have authorized their union, the International Brotherhood of Teamsters, to call a strike as early as August 1 after the current contract expires, the Teamsters announced on Friday.
The Teamsters represent more than 325,000 UPS employees across the United States, where the company employs nearly 450,000 people. The union said 97 percent voted to authorize the strike.
Many unions hold such polls to gain influence at the negotiating table, but only a much smaller percentage ultimately prevail. “The results do not mean that a strike is imminent and have no impact on our current business operations,” UPS said in a statement, adding it was “confident that we will reach an agreement.”
A UPS strike could 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 daily in the United States. And while UPS’s competition has increased in recent years, it would be difficult for rivals to quickly replace lost capacity, leaving some customers stranded and others facing higher costs.
“What happens when you try to stuff 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.
Since they began negotiating a national deal in April, the two sides have reached tentative agreements on a range of issues, most recently heat safety, including requiring air conditioning in new trucks from January and additional fans and vents for existing trucks .
But negotiators have yet to deal with pay increases, which the Teamsters say are overdue given the company’s strong performance in the pandemic era. The company’s adjusted net income increased more than 70 percent from 2019 to last year.
The union has also focused on reexamining the pay gap for a category of drivers who normally work weekends.
UPS CEO Carol Tomé, who took up the position in 2020, said in a recent earnings call that UPS agreed with the union on “several key issues.” She added that outsiders shouldn’t put too much stock in the “huge noise” likely to arise during the negotiations.
The talks will focus on the political position of Teamsters chairman Sean O’Brien, who repeatedly accused his predecessor James P. Hoffa of being overly forgiving towards employers during his 2021 campaign for union leadership.
Mr O’Brien complained that Mr Hoffa essentially forced a concession deal on UPS workers in 2018 after union members voted against the deal. He criticized his competitor for the presidency, a candidate close to Hoffa, for saying he was 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 on strike,” Mr O’Brien said at a candidates’ debate.
Mr. O’Brien has largely maintained his aggressive stance on UPS since taking office last year. In an October speech to activists from Teamsters for a Democratic Union, a reformist group that supported his candidacy, Mr O’Brien promised that “this UPS agreement will be the defining moment in organized labor.”
UPS drivers are generally paid more than the company’s competitors. UPS said the average full-time delivery driver with four years of experience makes $42 an hour, and part-time package sorters make an average of $20 an hour after 30 days.
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 said.
Beyond the overall wage level, the union has said it wants to scrap a category of drivers created under the 2018 contract.
The company said the category is for hybrid workers who, for example, sort parcels some days and drive other days, particularly Saturdays, to meet growing demand for weekend deliveries.
But the Teamsters said those workers never complied with the hybrid rule and simply drove full-time Tuesday through Saturday for less pay than other full-time drivers. The company says the weekend drivers earn about 87 percent of the base salary of regular full-time drivers and that some employees worked under a hybrid arrangement.
In the event of a strike, deliveries to consumers, such as e-commerce orders, are likely to be the first to be disrupted. However, experts said the supply chain could also suffer. Some suppliers are struggling to get goods like auto parts to manufacturers quickly, potentially causing production slowdowns.
Even a brief strike could take a toll on UPS. Many customers have long relied solely on the company, but that began to change after the Teamsters last went on strike in 1997, Mr Amling said. After this strike, which lasted just over two weeks, more customers began working with multiple carriers. The fallout was masked by gains from the rise of e-commerce and a reduced choice of competitors, but the company may not be so lucky today.
Niraj Chokshi contributed to the coverage.