March 25 2013 08:40 PM

As the calendar inches closer to a July 31 expiration of the collective bargaining agreement between United Parcel Service (UPS) and the International Brotherhood of Teamsters (IBT), there is a growing concern that the two sides are still far apart. 

Is UPS headed towards a strike?

At issue are differences over two master labor agreements set to expire at the end July 2013: (1) The 2008-2013 UPS National Master Agreement for small parcel that covers 250,000-260,000 IBT members; and (2) The 2008-2013 UPS Freight Agreement which impacts approximately 13,000 workers. 

Although the two sides began negotiations nearly a year early and progress has been made, an agreement is reportedly far off. In each of the past two negotiations (2002 and 2008), a deal was reached well before the existing agreements expired. 

Both sides concede that initial objectives to reach a tentative agreement by the end of March are highly unlikely. A labor dispute in 1997 shut UPS down for 15 days.

What’s the status of contract negotiations, on what issues do the sides remain far apart, and when is resolution expected?

While UPS will not discuss the substance of what is said at the negotiating table, UPS has confirmed that progress is being made, and it fully believes an agreement will be reached prior to the expiration of the existing contract. IBT, for its part, has provided regular updates on its website ( every few weeks.

Clearly, the 10-month head start to negotiations has led to early progress. Initial negotiations have centered mostly on “non-economic” issues. Primary IBT issues and concerns are:

• Limiting UPS’s ability to subcontract or use non-IBT supervisors for union work; 
• Allowing Union employees to accumulate discretionary days; 
• Giving part-time Union workers the opportunity to move into full-time work; 
• Concerns regarding work conditions, and health/safety issues; 
• Understaffing and excessive overtime for drivers that work 9.5 hours on three days in one work week; 
• “Harassment” issues, including the use of technology to track and monitor the whereabouts of UPS drivers;
• Protecting Teamster jobs threatened by the growth of UPS SurePost, a parcel product in which lightweight, low value, residential packages are tendered to the US Postal Service for “final mile” delivery.

The two sides have reportedly reached tentative agreements on many of these non-economic issues, and recently exchanged proposals on “economic” matters including pensions, health care and wages. 

Following a national conference call with UPS union stewards on March 23, Teamsters for a Democratic Union (TDU) outlined on its website IBT’s specific economic proposal to UPS as follows:

• New full time jobs in each year of a 5-year contract
• $1.50/hour wage increase in each year of the contract to pay for pension and health benefits
• Annual wage increases of more than $1 for all UPS Teamsters
• A “wage bump” for part-timers to reduce the widening gap between full and part-time pay
• An increase in the starting pay for part-timers to $15 an hour

What does UPS want? According to the TDU, UPS’s initial economic proposal was an “insulting low-ball offer” that included:

• A 7-year agreement
• Elimination of one category of full-time jobs as they became vacant
• Benefit contributions too low to maintain Teamster pensions and healthcare benefits
• Bonuses in lieu of wage increases in four of the seven years of the contract, and $.25-$.50 wage increases in the remaining years.

UPS has only stated it wants a fair contract that allows the Company to be flexible and remain competitive.

However, the tone and language of negotiations appear to have moved from positive and cooperative in nature to contentious. Negotiations are reportedly scheduled through the end of March, but are likely to break off before resuming at some point in April. 

While still confident the two sides will eventually resolve differences prior to the expiration of the current contract, Ken Hall, Teamster’s General Secretary-Treasurer and Package Division Director reportedly said negotiations could roll into mid-summer. Even after an agreement has been reached, IBT’s approval and ratification process can take several weeks. 

FedEx has reportedly met with many volume UPS shippers stating that they will not accept new customers should UPS workers strike, and that if shippers wanted to shift business from UPS to FedEx, now is the time. 

However, as reported in the Wolfe Trahan “The State of Freight” first quarter 2013 shipper survey results, while 82% of shippers said they have no plans to shift parcel volumes to FedEx during IBT/UPS contract negotiations, the end of March is seen as a critical period. If a tentative agreement has not been reached by the end of Q1, Wolfe Trahan expects to see an acceleration of volume shifts to alternate providers including FedEx, US Postal Service and regional parcel carriers.

Rob Martinez, DLP is President & CEO of Shipware LLC, a parcel auditing and consulting company based in San Diego, CA. He welcomes questions and comments and can be reached