Teamsters Overwhelmingly Ratify UPS Contract

UPS city delivery

As expected, the International Brotherhood of Teamsters voted overwhelmingly to ratify a new five-year contract with UPS, giving the 340,000 members at the carrier higher wages for part- and full-time workers, and eliminating a hated two-tier system of driver classification.

More than 86% of union members voting said yes to the new contract, the Teamsters said, adding it was a record for a UPS deal.

The contract won’t become finalized, however, until a supplemental agreement covering 174 members of a Florida local is approved. The union’s national negotiating committee will work with UPS to resolve the issue. The Teamsters did not say what the sticking point was in the sunshine state.

Next up in the sights of Teamsters general president Sean O’Brien, seeking to seize a labor moment: Amazon. Members of the union have already been actively joining job actions organized by workers employed at Amazon contractor firms across the country. A group of Amazon contract drivers in California joined the union in April. The company said the DSP had been terminated for performance issues.

“Our members just ratified the most lucrative agreement the Teamsters have ever negotiated at UPS,” O’Brien said in a release. “This contract will improve the lives of hundreds of thousands of workers. Teamsters have set a new standard and raised the bar for pay, benefits and working conditions in the package delivery industry. This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon better pay attention.”

There were groups opposed to the contract, including a socialist organization that alleges some Teamsters questioned the ratification vote total. The group, which had been pushing a “vote no” campaign, said some Teamsters grumbled about the minimum $21 per hour for part-time drivers, which they felt should have been $25 per hour.

Under the agreement, all Teamsters at UPS will get $2.75 more per hour in 2023, and an increase of $7.50 per hour over the life of the contract. The average top rate for drivers will be $49 per hour.

The contract also eliminates the 22.4 driver classification, making weekend drivers “regular package car drivers” eligible for the seniority track. Also, all new vehicles into service after Jan. 1, 2024 will have air conditioning, and there will be no more forced overtime on days off.

What remains to be seen is how UPS absorbs the added expense of the new contract, which O’Brien estimates is worth $30 billion over the life of the agreement. Experts agree prices will have to rise to compensate, including a higher general rate increase (GRI) next year. But UPS needs to walk a line, maintaining margins to satisfy Wall Street while not pricing out too much business. The GRI was a record 6.9% in 2023, matching rival FedEx, but is only a starting point for pricing and volume negotiations.

Earlier this month, UPS CEO Carol Tome said the carrier saw an average 1 million pieces per day diverted to competitors in the second quarter, due to concerns over a potential strike. Average daily volume was down 12.2% in June alone. The company is now in major clawback mode to regain lost business.