UPS and the Teamsters Union reached a tentative agreement for a new five-year contract on July 25, just days ahead of a potential strike that could have started as early as August 1.
Union leaders released news of the handshake agreement midday Tuesday. The five-year agreement covers U.S. Teamsters-represented employees in small-package roles and the deal includes pay raises for both full- and part-time workers, improvements to working conditions, and it marks the end of mandatory overtime on drivers’ days off.
UPS CEO Carol Tomé elaborated on the deal in a statement issued post-announcement, “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”
The UPS-Teamsters relationship has been rooted in collective bargaining agreements that determine the terms and conditions of employment for UPS’s vast workforce. These agreements have ensured stability and productivity within the company’s operations. However, the latest dispute revolved around issues such as wages, working conditions, and benefits.
Strike still a possibility
While the tentative agreement is set, the threat of a strike is not necessarily over. Workers still need to ratify the tentative deal, leaving space for some labor and economic uncertainty. Rank and file voting will begin as early as Thursday and may continue for several weeks.
The supply chain is no stranger to disruptions. However, a potential strike could have caused a domino effect that left millions of packages undelivered, according to Steve Tracey, the executive director of the Penn State Center for Supply Chain Research (CSCR).
“Between Amazon, the U.S. Postal Service, and FedEx, they were not going to be able to absorb an extra 14.9 million parcels a day into their networks. That’s just not feasible. So, what would have happened? Well, things wouldn’t have gotten delivered. Things would be delayed. And it’ll eventually it would have caused a backup in the entire small package ground system,” Tracey said.
As one of the world’s largest package delivery and logistics companies, UPS plays a crucial role in the global supply chain. And as Tracey indicates, any disruption to its operations can have far-reaching consequences such as work stoppages that could cripple the U.S. economy and negatively impact businesses and consumers alike.
Moreover, delays in shipments could cause inventory shortages, leading to production slowdowns and inventory management challenges across multiple industries.
The UPS-Teamsters Union disagreement holds significant supply chain implications. As two key players in the global logistics landscape, the resolution of their dispute is crucial for maintaining a seamless flow of goods and economic stability.
What are the lessons learned here for business? If you’re reliant on small-package-ground as one of your modes to deliver goods and services to customers, you need to diversify your supply base.
Besides UPS, both USPS and FedEx are major players in the market. Amazon is starting to play a larger role in delivery and there are several small players and GIG options to consider. So, while the UPS-Teamsters’ potential settlement is welcome news – it reminds us that supply chain risk and resiliency planning should always be high on the list of any supply chain leader.