United Parcel Service workers have authorized their union, the International Brotherhood of Teamsters, to call a strike as soon as Aug. 1, after the current contract expires, the Teamsters announced Friday.
The Teamsters represent more than 325,000 UPS employees in the United States, where the company has nearly 450,000 employees overall. The union said 97 percent had voted in favor of strike authorization.
Many unions hold such votes to create leverage at the bargaining table, but a much smaller percentage end up following through. “The results do not mean a strike is imminent and do not impact our current business operations in any way,” UPS said in a statement, adding that it was “confident that we will reach an agreement.”
A UPS strike could have significant economic fallout. The company handles about one-quarter of the tens of millions of parcels shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index. And while UPS’s competition has grown in recent years, rivals would be hard-pressed to replace that lost capacity quickly, leaving some customers in the lurch and others facing higher costs.
“What happens when you try to stuff 25 percent more food into a stomach that’s 90 percent full?” said Alan Amling, a fellow at the University of Tennessee’s Global Supply Chain Institute and a former UPS executive.
The two sides have reached tentative agreements on a number of issues since they began negotiating a national contract in April, most recently on heat safety, including a requirement for air conditioning in new trucks beginning in January and additional fans and venting for existing trucks.
But the negotiators have yet to tackle pay increases, which the Teamsters say are overdue amid the company’s strong pandemic-era performance. The company’s adjusted net income increased by more than 70 percent from 2019 to last year.
The union has also focused on revisiting pay disparities for a category of driver who typically works on weekends.
The UPS chief executive, Carol Tomé, who started in that position in 2020, said on a recent earnings call that UPS was aligned with the union on “several key issues.” She added that outsiders should not put too much stock in the “great deal of noise” that was likely to arise during the negotiation.
Looming over the talks is the political standing of the Teamsters’ leader, Sean O’Brien, who during his campaign for the union’s presidency in 2021 repeatedly accused his predecessor, James P. Hoffa, of being overly conciliatory toward employers.
Mr. O’Brien complained that Mr. Hoffa had essentially forced a concessionary contract onto UPS workers in 2018 after union members voted down the deal. He criticized his opponent for the presidency, a Hoffa-aligned candidate, for being unlikely to strike.
“You already conceded that in your 25-year career, you only struck six times, so UPS knows you’re not going to strike,” Mr. O’Brien said at a candidates’ debate.
Mr. O’Brien has largely maintained his aggressive stance on UPS since taking over as president last year. Speaking in October to activists with Teamsters for a Democratic Union, a reformist group that backed his candidacy, Mr. O’Brien vowed that “this UPS agreement is going to be the defining moment in organized labor.”
Compensation for UPS drivers is generally higher than pay at the company’s competitors. UPS said that the average full-time delivery driver with four years’ experience makes $42 an hour, and that part-time workers who sort packages make $20 an hour on average after 30 days.
The groups receive the same benefits package, which includes health care and pension contributions and is worth about $50,000 a year for full-time drivers, the company says.
Beyond overall pay levels, the union has said it wants to eliminate a category of driver created under the 2018 contract.
The company said the category was intended for hybrid workers who performed jobs like sorting packages on some days while driving on other days, especially Saturdays, to address the growing demand for weekend delivery.
But the Teamsters said these workers never followed the hybrid arrangement and simply drove full time from Tuesday to Saturday, for less pay than other full-time drivers. The company says that the weekend drivers make about 87 percent of the base pay of regular full-time drivers, and that some employees have worked under a hybrid arrangement.
In the event of a strike, deliveries to consumers, such as e-commerce orders, would probably be among the first to be disrupted. But experts said the supply chain could suffer, too. Some suppliers would struggle to quickly ship goods like automotive parts to manufacturers, potentially causing production slowdowns.
Even a short strike could take a toll on UPS. Many customers long relied exclusively on the company, but that started to change after the Teamsters last went on strike in 1997, Mr. Amling said. After that strike, which lasted just over two weeks, more customers began to work with multiple carriers. The consequences were masked by gains from the rise of e-commerce and fewer competitors to choose from, but the company may not be so fortunate today.
Niraj Chokshi contributed reporting.