UPS and The Teamster union announced they have agreed on a new tentative five-year deal covering about 250,000 drivers and package handlers.
The agreement, which still needs to be voted on by union members next month includes pay increases but also lays the groundwork for Sunday deliveries by UPS.
“I am confident that once the membership has reviewed and understood the changes, they will see that this agreement is among the very best ever negotiated for UPS members.”
Denis Taylor, co-chairman of the Teamsters UPS National Negotiating committee
Some of the specifics of the deal include:
- Significant increases to the full-time progression rates and general wage increases have been tentatively agreed to, totaling $4.15 over the life of the agreement.
- Part-time package handlers starting pay increases from $10.35 hour to $13, with additional rises to $15.50 over the next few years.
- The two-tier wage structure has been eliminated as well. All part-time employees hired after August 1, 2018 will make the new higher start rate.
- A new classification of full-time combination driver starting at $20.50 and reaching a top rate of $34.79 by August 1, 2022.
The last bit was the main sticking point between UPS and the union. According to the Teamsters, “this provision will help to resolve several membership concerns, including Saturday and Sunday delivery…”
The bottom line for eCommerce retailers is that this agreement avoids a possibly very disruptive summer time strike.
UPS was able to set the framework for expanding weekend deliveries within a cost structure that is fair to both the company and its workers.
Certainly, there was a lot of pressure on both sides to come up with a reasonable agreement because FedEx, USPS, DHL (with Parcel Metro), and Amazon (with Amazon SWA in the early stages) are starting to crowd a parcel delivery market in the U.S.
UPS has been ceding market share for years and this will likely continue as eCommerce grows and more companies are trying to take a bite of the delivery pie.
Only an expansion of services will slow market share erosion while maintaining revenue growth.
One could argue it is a very unusual time for UPS as the industry is expanding at a rapid rate, but other companies are creating service and market share pressures on the parcel delivery company.
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