UPS: Potential Strike Could Be Largest In Nearly Seven Decades

A strike by 340,000 UPS full- and part-time drivers, loaders, and package handlers against the giant package delivery company United Parcel Service, Inc. (NYSE: UPS) looks much more likely now than it did just a week ago. A work stoppage could begin at 12:01 AM on August 1.  

In the very early morning hours of July 5, UPS and Teamsters union representatives ended contract talks after more than two months of negotiations on what would have been a new four-year labor contract. Each side accuses the other of walking away from the negotiating table, and no new talks are scheduled.

The economic implications of a potential strike are enormous — and not just for UPS’s workers and shareholders. UPS estimates that it “transports more than 3% of global GDP and 6% of U.S. GDP daily.” In 2022, UPS delivered an average of 24.3 million packages per day. FedEx Corporation (NYSE: FDX), the next largest package delivery company, handles about 15 million packages daily.

A UPS strike would be the largest in the U.S. since the 1950’s, and the first UPS Teamsters work stoppage since 1997 when 185,000 UPS Teamsters workers struck for 15 days. An August 1997 article in The New York Times said the action “largely crippled the world’s largest package delivery company.”

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Of course, we are many days away from August 1, which implies there is more time to reach a deal regardless of how apart the sides currently are. However, both sides had emphasized that reaching a deal around July 5 was necessary to avoid a strike. Indeed, on June 30, UPS pledged to reach a deal with the Teamsters by July 5. From the Teamsters perspective, any new contract will have to be disseminated to and then voted on by union members, not-so-simple tasks given the enormous number of UPS Teamsters workers. Teamsters General President Sean O’Brien has said on more than one occasion that his union will not work past July 31 without a fully ratified contract.

The Teamsters demands apparently include a marked reduction in excessive overtime, the end of two-tier pay, more full-time jobs, and job security for feeders and package drivers. 

Make no mistake, any decision to strike will be at least a temporarily painful one for many UPS workers, as many workers would be foregoing very substantial pay. According to UPS, a long-haul team driver currently receives US$172,000 annually in total compensation, and tractor-trailer feeder drivers are paid US$162,000 per year. Even a full-time package delivery driver with four years of experience receives about US$87,000 annually. 

United Parcel Service, Inc. last traded at US$179.76 on the NYSE.

Information for this briefing was found via UPS, Reuters, Teamsters and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.