Back to bargaining for UPS in its thorny parcel, freight contracts

The company was dealt an historic rebuke when the largest union contract in North America covering 235,000 full- and part-time Teamsters at UPS’s parcel division rejected 18 side agreements known as supplemental agreements. The master parcel contract was passed by a narrow 53-47 margin.

By ·

It is back to the drawing board—or, more accurately, the bargaining table—for UPS and Teamsters negotiators.
The company was dealt an historic rebuke when the largest union contract in North America covering 235,000 full- and part-time Teamsters at UPS’s parcel division rejected 18 side agreements known as supplemental agreements. The master parcel contract was passed by a narrow 53-47 margin.
The contract was due to expire on July 31. UPS officials had opened bargaining last year in hopes of an early agreement. What they have now is basically half a deal—five-year agreement on $3.90 per hour wage hikes on top of its current $31.34 hourly base rate—but no deal on many supplemental deals covering such thorny issues as health care costs and fringe benefits.
UPS officials went out of their way to downplay the importance of the rebuke of the supplemental agreements. John McDevitt, senior vice president of UPS, issued a statement saying it remains “business as usual while UPS and the IBT (Teamsters) resolve remaining issues and Teamster-represented employees ratify new agreements.”
That may take a while. The Teamsters members rejected 18 regional and local contract agreements, which all need to be renegotiated, re-voted, and approved by members before the national agreement can go into effect. That means that 63 percent of UPS Teamsters covered by supplements or riders were rejected.
Ken Paff, organizer for the dissident Teamsters for a Democratic Union, says the rejection is “a very embarrassing” blow to the union and Ken Hall, its chief negotiator for the parcel division.
Although UPS earned $4.5 billion last year, it is calling for increases in out-of-pocket health care costs for UPS workers, who previously enjoyed free dental coverage (now with proposed $1,500 annual limits), low co-pays and no deductibles (now $400 per person) in the rejected supplements.
Paff is predicting a “long slog” in the renegotiations. “They are moving at a glacial pace,” Paff told LM. “They’re going to try and wear down, scare down and beat down the members. Who knows when it will end?”
Separately, there is also more negotiating work to be done at UPS Freight, the former Overnite LTL company, where the national contract was rejected by a 2-to-1 margin covering 12,000 drivers and dock workers at UPS’s heavy freight division.
Those workers were offered wage increases totaling $2.50 an hour – 50 cents an hour rising each of the contract’s five years—but that was rejected soundly. As with the parcel contract, there are controversies over health care coverage, pension and retirement benefits, and other fringes.
This was just the second national agreement ever negotiated at UPS Freight, which rebranded Overnite after buying the company for $1.2 billion in 2005. Once mostly a non-union company, Overnite was founded in 1935. It has undergone many changes in the interim, enduring an at-times violent three-year strike from 1999-2001 before remaining mostly non-union under former CEO Leo Suggs.
After UPS bought Overnite, it expanded union coverage for nearly all its 12,500 workers. Its first national contract was approved in 2008. That first contract was largely viewed as a “sweetheart” deal between UPS/Overnite and the IBT for card check agreement in return for letting the UPS Teamsters pay $6.1 billion to get out of the underfunded Central States Pension Fund, where UPS faced potentially tens of billions of potential withdrawal liability.
But this latest rejection marks the first time a large national transport contract was turned down by a union since the Independent Pilots Association rejected a deal in 1967.
As with the parcel contract, the UPS Freight renegotiation is proceeding slowly and out of the public eye.  TDU’s Paff called UPS’s negotiating strategy “the sounds of silence,” referring not just to the media blackout but the company’s behind-the-scenes strategy of apparently waiting out the rank-and-file.
Sources within the Teamsters union say they want several issues resolved at UPS Freight, including:
• Banning subcontracting of Teamster work.
• Pension improvements.
• No premiums for health insurance:
• Raises of $1 per hour each year—same as the UPS package workers’ raises.

The UPS parcel contract probably would have been rejected had it not been for large “Yes” majorities in three regions: the Southern, the Atlantic Seaboard, and New England.

The rest of the country, a large majority rejected the deal, including some of the larger and more important UPS facilities.
At UPS’s main air hub in Louisville, Ky., where 10,000 workers are employed, Paff said the contract was rejected by an 8-to-1 ratio—even though the company was offering a $1,000 signing bonus to all workers (including part-timers who start at $8.50 an hour).
IBT Local 89 in Louisville (whose motto is “A tough union for tough times”), issued strong opposition to the contract extension, calling the action “deplorable” and accused chief negotiatior Hall of a “sell-out” to UPS.
“The International Union has essentially given away the members’ right to strike,” the local said in a statement. “This seriously degrades the leverage needed to force UPS to finally agree to a fair contract that addresses the concerns of its workers.
“We strongly condemn this move by the IBT/UPS. Ken Hall and the IBT’s sell-out actions are beyond deplorable. Through these actions, Ken Hall and UPS are working to destroy the livelihoods of Teamster workers and their families.
“This seriously degrades the leverage needed to force UPS to finally agree to a fair contract that addresses the concerns of its workers,” the local said.
At UPS’s main West Coast air hub in Ontario, Calif., the package contract was rejected by a 2-to-1 ratio, according to Paff. In Western Pennsylvania, it went down by a 5-to-1 ratio, he said.
“The members are fed up with UPS,” Paff said. TDU is circulating petitions among Teamsters that say: “We’ll Keep Voting No Until UPS Gets it Right.”
The big issue for UPS is its health care benefits. Faced with skyrocketing health care costs, UPS is trying to ameliorate those costs by making UPS Teamsters pay more in the form of higher deductibles, higher co-pays and annual limits on coverage. It has not gone down well among the rank and file, who still pay no upfront costs to join UPS’s plan.
“Anywhere the health care was changed, the contract was voted down by a large margin,” Paff said.
From a company earning more than $4.5 billion in a so-so economy, Paff concluded, “The contract is very mediocre.”

About the Author

John D. Schulz
John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

UPS · UPS Freight · All Topics
Latest Whitepaper
Private Fleet vs. Dedicated: Which one is right for you?
Having the right fleet for your business can give you an advantage over the competition and lower transportation costs.
Download Today!
From the April 2017 Issue
While adoption rates have remained relatively flat, yard management systems (YMS) are helping logistics operations turn that important space between the loading dock and the gate into a vital link in the supply chain.
Information Management: Wearables come in for a refit
2017 Air Cargo Roundtable: Positive Outlook Driven by New Demand
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Maximize Your LTL Driver Adherence with Real-time Feedback
This webinar shows how companies are using real-time performance data to optimize the scheduling of their city fleets, as well as the routing of their standard, accelerated and time-critical shipments.
Register Today!
2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...

ASEAN Logistics: Building Collectively
While most of the world withdraws inward, Southeast Asia is practicing effective cooperation between...
2017 Rate Outlook: Will the pieces fall into place?
Trade and transport analysts see a turnaround in last year’s negative market outlook, but as...