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UPS and Teamsters Clash over Contract Talks, Strike Looms

UPS and the Teamsters union accuse each other of abandoning contract negotiations, fueling the possibility of a major strike.

UPS cargo vehicle
UPS cargo vehicle

Tensions Escalate in UPS-Teamsters Negotiations

The Teamsters Union announced on Wednesday that the United Parcel Service (NYSE: UPS) has ceased contract negotiation efforts. However, UPS swiftly denied the claim, countering with its allegation that the union had stalled the talks. The feuding parties exchanged barbs in the early morning, both seeking an agreement to avert a strike as the present contract, covering approximately 340,000 workers, nears expiration.

The Imminent Threat of a Significant Strike

UPS workers have given the go-ahead for a strike if negotiations crumble. This potential labor disruption would be the first since 1997 for UPS employees, a strike that lasted 15 days, cost UPS $850 million, and resulted in some customers switching to competitor services. Both the union and company representatives have previously stated their intention to finalize a deal to prevent a strike that could jeopardize millions of daily deliveries.

Potential Gains for Rival FedEx Amidst Weak E-commerce Demand

In the event of a strike, UPS could find it challenging to recover the volumes it might lose to competitor FedEx (NYSE: FDX), according to Satish Jindel, president of ShipMatrix, a logistics consulting firm. The two delivery companies are currently grappling with sluggish e-commerce demand.

The Fight for Better Wages and Working Conditions

After missing wage hikes during the pandemic, unions are rebuffing contract offers from companies dealing with labor shortages, demanding higher salaries and improved working conditions. UPS has called its offer historic, arguing that the union should return to negotiations.

Disagreements and Discontent Linger

The Teamsters maintain that UPS has chosen the wrong path, rejecting the company's offer and accusing it of abandoning negotiations. Despite UPS's recent offer enhancements, Teamsters' general president Sean O'Brien argues that they don't adequately reward workers who risked their lives to keep packages moving during the early days of the COVID-19 pandemic, a period that proved profitable for the company.

The Broader Impact on Retailers and Economy

If negotiations remain stalled, it could result in significant discomfort among employees and customers, potentially disrupting the U.S. economy, UPS warned on Wednesday. Meanwhile, the National Retail Federation (NRF) urged both parties to continue talks and avert a strike. Retailers are considering relying on diversified delivery options they devised during the pandemic-induced disruptions in case of a strike.

UPS Shares Dip Amidst Contract Talk Uncertainties

Uncertainty around the contract talks led to a slight dip in UPS shares, which closed down 2% at approximately $180.