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United Parcel Service (UPS) and the International Brotherhood of Teamsters reached a tentative new five-year collective bargaining agreement covering approximately 330,000 delivery and warehouse workers.
The agreement, if finalized, would avert the largest single strike against a company in US history and an estimated $7 billion hit to the US economy.
The union’s current contract with the delivery giant expires Aug. 1, and the Teamsters had threatened that drivers would walk off the job without a deal. Talks between the two sides restarted today after stalling earlier in the month.
“We’ve reached a win, win, win agreement,” a UPS spokesperson said in an email to Yahoo Finance. The company added that it will update its guidance concerning the agreement, including its projected cost, during its second quarter earnings call on August 2.
“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,” Carol Tomé, UPS chief executive officer, said.
The big sticking point between the two sides before today was an agreement on pay rates for UPS’s part–time union workers.
Those workers make up more than half of the company’s workforce and earn an average of $20 per hour after 30 days on the job. This group already gets the same healthcare and pension benefits as full-time workers.
A strike threatened to upend the US supply chain, add to inflationary pressures, and possibly push loyal UPS customers to competitors such as FedEx (FDX), Amazon (AMZN), and the United States Postal Service.
UPS currently handles 22 million domestic packages a day. It was responsible for delivering 24.5% of all US parcels in 2022, according to Pitney Bowes. Only the Postal Service handled more.
The company said its daily deliveries account for roughly 5-6% of US gross domestic product (GDP). Teamsters Union president Sean O’Brien said at a rally Saturday that the deliveries represented 7% of GDP.
The last UPS strike was in 1997, when roughly 185,000 workers walked out. At the time UPS handled fewer packages per day but was responsible for more total industry traffic.
That work stoppage lasted for 15 days and cost UPS hundreds of millions of dollars. The company eventually made concessions on pay, pensions, and part-time workers.
Before today the two sides had been able to settle a number of other issues, including ending forced overtime on unscheduled days, air conditioning for new delivery cabs, disabling inward-facing delivery vehicle cameras, more full-time positions and more hours for seasonal part-time workers.
The union and UPS also agreed to eliminate a pay class for a hybrid group of full-time workers who sort and load packages in the company’s warehouses, as well as drive and deliver packages.
This group was formed in a mutual agreement between UPS and the union to meet demands for Saturday delivery.
Those workers who work Tuesday through Saturday and earn $36.54 per hour plus benefits will convert to regular full-time workers, though their pay rate has not yet been disclosed by the parties.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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