The 2:00 Minute Warning

Since it’s a holiday week, we’re bringing you our Two Minute Warning early (instead of on Wednesday as usual) so we can wish you a Happy Fourth of July!

After months of being told that the contract negotiations between UPS and the Teamsters were going smoothly, it appears that the “Kumbaya moments” have officially come to an end. Both parties said they were making progress and came to agreement on 55 non-economic matters. Now comes the important stuff!

With twenty-eight days before the expiration of the contract (on July 31) we are now in what we are calling the “Jerry Maguire moment” in the negotiations. In other words, Sean O'Brien, the President of the International Brotherhood of Teamsters (IBT) is in essence shouting to UPS: “SHOW ME THE MONEY!”

And last week, UPS did just that. They gave the Teamsters their proposed financial terms for the contract. To no one’s surprise, the Teamsters immediately rejected the offer as being (my words here) awful, terrible, atrocious – and fill in whatever other words you want to officially reject the offer.

As Sean O’Brien (a.k.a. Jerry Maguire) stated: “If UPS wants to negotiate a contract for 1997 working conditions, they’re going to get 1997 consequences.” Those consequences were a seventeen day strike that paralyzed a lot of supply chains.

To make matters even more interesting, the Teamsters pulled away from the negotiating table and demanded that UPS present its “final and best offer” by June 30 - that would be last Friday for those without a calendar.

On Friday, UPS submitted a revised proposal. The Teamsters said that while UPS had made progress in agreeing to their demands, there is still a gap between what the Teamsters are seeking and what UPS is currently proposing. They've issued a new ultimatum that UPS now has until this Wednesday, July 5, to submit its “best and final” offer.

On Saturday, Sean O'Brien held a press conference that basically said that the Teamsters have all the leverage in the negotiations and will continue to apply that leverage. The good news is that it appears that UPS is doing what it can to avoid a strike and have agreed to meet other priorities for the Teamsters such as eliminating the two-tier wage system and ending forced overtime. While it appears that progress is once again being made, there are still concerns about the possibility of a strike or some sort of labor disruption occurring if an agreement is not finalized by the July 31 deadline.

If you are a shipper that uses UPS, hopefully you have a contingency plan in place that addresses the options to pursue in the event that there is a work stoppage at UPS. If your contingency plan is not yet in place, or if you’re looking for some support in having these plans reviewed, we can help! Just send us an email or give me a call or use the Calendly the option and we will get right back to you.

As we have pointed out in previous Two Minute Warnings, the Teamsters may have other objectives beyond just getting a contract in place with UPS. For example, it is no secret that the Teamsters would like to come away from these negotiations with a “BIG WIN” to help their recruiting drive to organize workers at places like Amazon.

Before signing off, we have received several requests for a brief update on the Teamsters negotiations with Yellow. As we outlined in last week’s Two Minute Warning, the One Yellow initiative has been facing resistance from the Teamsters. Based on the channel checks in our network, here is what the Teamsters refuse to accept: The only way Yellow can survive and flourish is by eliminating the redundancy in its network, selling terminals they don’t need and adopting work rules that allow it to effectively compete with non-union carriers.

Yellow recently issued a lawsuit to address their alleged loss of $137 million. They’ve also recently claimed that they could run out of money by August if they’re not able to move forward with their plans.

The situation is very challenging but Yellow is no stranger to adversity. So while it’s reasonable to have concern for any carrier in this situation, we think analysts are overlooking some important aspects, such as Yellow’s past resiliency, the value of their current holdings and the importance of their “super regional” network.

If you’d like to learn more about either of these issues or have questions, simply give us a call, send us an email, or schedule time to meet on Calendly.

Have a great July 4th celebration.

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

CONNECT ON LINKEDIN

MEET WITH CALENDLY