Leaders of Teamsters union locals representing more than 250,000 workers at UPS Inc. and its UPS Freight less-than-truckload (LTL) unit late yesterday unanimously approved two tentative five-year contract agreements. The move sends the compacts to the respective rank-and-file for a ratification vote sometime next month.

The approvals, which had been expected, move the Atlanta-based shipping and logistics giant and the Teamsters one step closer to labor peace through July 31, 2018. If ratified by the rank-and-file, the new contracts would take effect Aug. 1, the day after the current pacts expire.

UPS and leaders of the international union leaders agreed April 26 to tentative agreements covering the unionized employees at UPS and the LTL unit.

Ballot packages will be mailed at the end of May. Ballots will start being counted on or around June 20, according to the union. The UPS contract covers about 240,000 workers represented by the union's small package division, while the UPS Freight agreement covers between 10,000 and 12,000 workers at the unit. It represents the largest collective-bargaining agreement in North America.

For workers in the parcel unit, the agreement calls for $3.90 per hour in wage increases for full-time workers. UPS Freight workers will receive $2.50 per hour in wage hikes over the five-year period. UPS' part-time pre-loaders and sorters will see their hourly pay bumped to $11 from $8.50; all others would receive an increase to $10 an hour.

UPS' parcel workers will continue to receive health insurance without paying any premiums. The issue was a top priority for union negotiators, who vowed that they would not budge on anything else unless UPS guaranteed there would be no change in the members' health benefits.

The tentative contract at UPS Freight calls for the creation of a new position known as "line haul driver." A procedure will also be implemented to identify "two-way runs," which would require UPS to add jobs to the road driver classification, according to the Teamsters. In addition, by Nov. 1 all laid-off UPS drivers at facilities where subcontractors are being used will be recalled to full employment.

The union said the measures are aimed at cracking down on UPS' practice of subcontracting out driver work at the unit. Ken Paff, national organizer at the dissident group Teamsters For a Democratic Union (TDU), has estimated that subcontractors perform about half of the unit's driving.

CHANGES TO SUREPOST
The tentative contract sets new requirements governing the handling of parcels under UPS' "Surepost" partnership with the U.S. Postal Service. Under Surepost, UPS delivers parcels deep into the USPS' system and then a letter carrier then makes the final delivery to the customer. The service is popular with e-merchants because it is low-priced and allows businesses to offer low-cost or free shipping of online merchandise.

The contract would require UPS drivers to deliver all SurePost parcels weighing more than 10 pounds and cubing out at more than three cubic feet. Surepost will only be used in business-to-consumer deliveries. However, it can be leveraged to "attract new commercial customers as well as to retain customers being solicited by competitors," according to language in the contract.

Initially, it was reported UPS would only be able to use Surepost to expand additional business or to keep customers from defecting to rivals, notably FedEx Corp., which has its own version of the product known as "Smartpost."

The tentative agreement stipulates that Teamster drivers will deliver any order that either contains two or more Surepost packages bound for the same address or any combination of Surepost packages and UPS ground packages headed for the same address.

The company also agreed that if any competitor stops providing a similar product either nationwide or in any service area, UPS will discontinue Surepost by the same proportion. In addition, an arbitration process will be established to hear any disputes relating to Surepost's expansion. If an arbitrator determines UPS expanded Surepost beyond the contract's scope without prior union approval, UPS could be ordered to terminate the expanded service.