UPS and Teamsters will return to the bargaining table next week

Negotiators for UPS Inc. and the Teamsters Union have agreed to resume their efforts next week to forge a deal on a new contract for the company’s package-delivery drivers, offering a ray of hope to nervous shippers, carriers, and retailers that have already been spooked by the possibility of a strike at the nation’s largest provider of courier and local delivery service.

The two sides had broken off negotiating on July 5 after each group accused the other of abandoning talks to hammer out a new deal. They now have just 12 days to shape a new agreement before the contract covering some 330,000 delivery and warehouse logistics workers expires on August 1.

“We are pleased to be back at the negotiating table next week to resolve the few remaining open issues. We are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees, and businesses across the country,” UPS said in a release.

The talks resume after Teamsters leaders have flexed their muscles in recent days through actions like holding “practice pickets” against UPS in local regions such as Madison Heights, Michigan, and Covina, California. In a related move, the Teamsters also announced July 18 they were prepared to strike the following week at troubled truckload freight line Yellow. 

“As thousands of UPS Teamsters practice picket, rally, and mobilize around the country, UPS bowed today to the overwhelming show of Teamster unity and reached out to the union to resume negotiations. The Teamsters National Negotiating Committee and the company will set dates soon to resume negotiations next week,” the Teamsters said in a release.

The labor group said it is seeking a new five-year agreement that guarantees better pay for all workers, eliminates a two-tier wage 22.4 job classification, increases the number of full-time jobs, addresses safety and health concerns around heat illness, and provides stronger protections against managerial harassment.

Shippers are watching the negotiations nervously because experts predict that even if a strike is avoided, UPS will soon raise its package rates if the union achieves those pay raise goals.

“The supply chain impacts with a negotiated deal before or after the deadline means increased costs for shippers. One of the primary sticking points in the negotiations has been around driver pay. An increase is guaranteed, but how much is yet to be known,” Spencer Shute, principal consultant at Proxima, a supply chain and procurement consulting firm, said in a release. “These costs will ultimately be passed on to shippers in the form of annual general rate increases and accessorial adjustments. As competitors work to retain drivers, they too will likely increase driver pay as well, meaning shippers won’t just see rate increases with UPS but across the parcel industry.”

The impact on shippers could be even greater if a strike occurs. According to Shute, the UPS competitors FedEx, USPS, and regional and local providers simply do not have capacity to take on the estimated 20 million packages per day that would be disrupted.

While some shippers have already diverted volumes and UPS has committing to prioritize certain customers by using non-union labor, the impacts would still be felt by shippers and consumers across the country. Consequences could include significant delays, held packages, and increased costs, sparking supply chain disruptions within the U.S. across all sectors, Shute said.