(Direct Newsline)–Ratification of the richest labor contract in the history of United Parcel Service by members of the Teamsters union could trigger a hefty rate increase next year for the catalogers and other direct marketers that use the Atlanta-based parcel shipper.
The contract, ratified by a 71.2% to 27.9% margin by 90,000 of UPS’s 210,000 workers last week, is retroactive to Aug. 1. It calls for a 22% pay hike over the next six years, the creation of 10,000 jobs, and the conversion of another contracted 10,000 positions.
With the contract estimated to cost the shipper about $9 billion over the next six years, there are strong indications that direct marketers using UPS to ship orders will be facing a hefty increase in their rates early next year. Sources said that rates go up by as much as 7%, or double this year’s increase of 3.5%.
Officials at UPS would say only that it’s too early to talk about a possible rate increase next year and how much it might be.
UPS chairman/CEO Mike Eskew said in a statement that ratification of the contract reflected that it was “a fair and balanced agreement that rewards [union members] for their hard work while allowing the company to remain competitive.”
The contract resulted from six months of talks leading to a tentative agreement on July 16, just 16 days before the five-year contract was to expire. That tentative agreement averted the possibility of a two-week strike like the one in 1997 that cost UPS $750 million.
In a separate statement, Teamsters president Jim Hoffa called the contract “a milestone for all of labor [because] it sets the tone for [contract] negotiations for years to come.”