Delivery company UPS and the union representing approximately 340,000 UPS employees in the U.S. have reached a tentative collective bargaining agreement, likely avoiding a strike that could have severely impacted businesses and households across the country.

The five-year deal covers union-represented employees in small-package roles and remains subject to voting and ratification by union members. Still, both UPS and the International Brotherhood of Teamsters — the union that represents the workers — applauded the likely done deal on July 26.

“Together we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees and to UPS and our customers,” UPS CEO Carol Tomé said in a statement. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

The Teamsters called the tentative agreement “overwhelmingly lucrative,” because it includes contract raises wages for all workers, creates more full-time jobs and includes dozens of workplace protections and safety improvements.

Under the agreement, which would last until 2028, existing full- and part-time UPS Teamsters will receive $2.75-per-hour raises this year and $7.50 more per hour over the length of the contract. Existing part-timers will be given raises up to no less than $21 per hour immediately, and part-time seniority workers earning more under a market rate adjustment would still receive all new general wage increases.

General wage increases for part-time workers will now be double the amount secured in the previous UPS-Teamsters contract, and existing part-time workers will receive a 48% average total wage increase over the next five years. In addition, wage increases for full-timers will keep UPS Teamsters “the highest paid delivery drivers in the nation, improving their average top rate to $49 per hour,” according to a Teamsters statement.

“Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits. Teamster labor moves America,” said Teamsters General President Sean M. O’Brien. “The union went into this fight committed to winning for our members. We demanded the best contract in the history of UPS, and we got it. UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers.”

Distributors, NAW Weigh In

While both sides celebrate the agreement, it’s worth noting that customers and even some distributors were monitoring the potential for a strike and preparing possible alternatives to secure and deliver products.

The National Association of Wholesaler-Distributors said the wholesale distribution industry would have faced “severe hardships” if a planned nationwide strike had occurred.

“For months now, a portion of our membership has been preparing their operations to absorb the impact of a UPS Driver’s Strike, while also working to offer solutions and contingency plans for those impacted by the strike,” NAW CEO Eric Hoplin said July 24. “The rest of our membership relies 100% on UPS and are trying to figure out how to do business if they must go without their carrier.”

NAW also released highlights from a recent member survey, which revealed that most members said UPS handles 50-100% of their inbound and/or outbound shipments. When asked to describe how a nationwide UPS worker strike of one to 15 days would impact their operations, most NAW members said they would see a “significant short-term impact on their operations.” Most of the NAW members surveyed also said they would support President Biden using his authority to declare a national emergency to end a nationwide UPS worker strike.

On July 24, ADI Global Distribution — No. 7 on MDM’s 2023 Top Electrical Distributors List — sent an email to customers outlining how it would respond if UPS workers proceeded with a strike. ADI said impacts would include “massive shortages in delivery options beginning August 1.”

“In anticipation, ADI has assembled our Transportation Emergency Response Team who are meeting regularly to respond to this event in real-time,” ADI said in the message, which was sent out one day before the Teamsters and UPS agreed on a new contract. “We’re putting contingency plans in place to help minimize the impact the strike may have on our operations, and our customers. “

ADI said it also prepared by increasing local inventory at more than 100 U.S. branch locations and identifying alternate carriers to manage portions of its outbound shipments.

Another distributor, AA Electric Control & Automaton, also sent out messages to customers ahead a potential strike.

“We are taking proactive steps to ensure your orders reach you,” the company said in an email announcement. “While there are some things outside of our control, such as labor strikes, rest assured that our staff is fully committed to finding solutions so that we can continue to provide you with the high level of service you deserve.”

Thankfully, it appears those contingency measures are no longer needed.