After months of collective bargaining, UPS and the Teamsters labor union have both announced a tentative handshake agreement relative to a new five-year labor contract. This new labor agreement, planned to go into effect on August 1st, is now subject to ratification from Teamster represented UPS employees in package delivery roles.

Negotiations will continue on a number of supplemental agreements concerning local work rules as well as a separate labor agreement that covers employees working in the UPS Freight segment. The overall effort represents one of the largest collective-bargaining agreements in the U.S. concerning upwards of 260,000 workers. UPS

Highlights of the new labor agreement include:

  • Hourly wage increases totaling $4.15 over the five-year period.
  • Elevating hourly wage rates for part-time employees in a range from $13 to $15.50 in annual increments over the five-year period. The agreement also calls for raising the number of full-time position opportunities for existing part-time employees.
  • Increases in the employer contribution to various employee health and welfare benefit plans, including pensions. According to the Teamsters union, this area was a top priority for union membership.
  • The creation of a new classification hybrid driver, with a full-time work schedule that overlaps with Saturday and Sunday delivery needs. The stated hourly pay range for this type of driver ranges from a staring point of $20.50 to a top capped rate of $34.79.

According to reports, the creation of the hybrid driver position inflamed certain factions of union members who have been garnering overtime pay for Saturday or late-night deliveries. Other union workers, especially during the peak holiday fulfillment period, complained of burnout with nonstop, intense delivery and sorting work schedules that spilled into Saturday or sometimes Sunday.

Today’s news provides a sigh of relief for many procurement, logistics and transportation support teams. With so many ongoing trade developments occupying teams, good news is welcomed.

Let us trust that the final ratification steps will occur smoothly.

 

Proposal for U.S. Postal Service Privatization

In a separate, but perhaps somewhat related development, The Wall Street Journal reported today that the Trump Administration is proposing to restructure the U.S. Postal Service with an eye towards privatization, similar to some other country-specific models.

The recommendation is reportedly part of a broad plan to trim the size of the U.S. federal government.

The President had previously formed a task force to review the finances and operations of the postal agency.

The report opines that a private operator could reduce costs by delivering mail over fewer days-per-week or to more centralized locations. It would further allow access to private capital to fund additional technology and operational improvements.

As Supply Chain Matters has also noted, the postal itself has been lobbying the U.S. Congress to ease burdens of the agency’s allocation of worker retirement benefits.

Any privatization move is subject to U.S. Congressional approval.

As we declared in a previous commentary relative to the current state of U.S. Logistics, industry business-as-usual practices are no longer adequate in the new exploding dimensions of online commerce. The USPS has, from our lens, performed an admirable job of adjusting its business and operational model to be able to be a key last-mile fulfillment partner for online retailers, especially Amazon. Absent the extraordinary influence of Congressional rules and mandates, the agency can well continue to be a viable and profitable carrier and services provider.

Privatization of this agency, beyond the political mine field of pending Congressional elections in the fall, further opens-up a significant question as to which existing carriers or online retailers such as Amazon, would desire to take advantage of operating the agency. As readers well know, both FedEx and UPS have existing last-mile delivery contracts with the agency and the former serves as the agency’s primary air transport contractor.

Interesting times indeed.

 

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