UPS, Teamsters agree to cut use of rail, rely more on sleeper team drivers

The tentative five-year contract agreed to late last night by UPS Inc. and leaders of the Teamsters union's small-package division calls for a significant reduction in intermodal use in favor of expanding the number of two-person "sleeper team" drivers operating over the road.

Under the tentative agreement, UPS will switch "many loads" currently moved by railroads to what the union, in a communiqué last night, referred to as a significant number of "newly created" sleeper teams. UPS' sleeper teams will be paid at levels that far surpass what any teams receive elsewhere in trucking, the union said. The proposal would create 2,000 full-time Teamsters jobs, according to the union. Atlanta-based UPS has operated with over-the-road sleep teams for a number of years.

Depending on the amount of converted volume, the provision could be a blow to the nation's railroads. UPS has long been one of the largest, if not the largest, individual users of intermodal services. The company would not comment on how much traffic moves via intermodal.

Two-person sleeper teams split a fairly generous cents-per-mile rate between them, and they are considered some of the highest-paid drivers on the road today. Sleepers can make a combined wage of well into the six figures, depending on the carrier. Sleepers are in higher demand now after the implementation of the electronic logging device (ELD) mandate, which requires strict adherence to driver hours-of-service regulations. Unlike a solo driver, who must pull off the road after 11 hours of continuous driving (with a 30-minute break after 8 hours), in a team one of the drivers can take the wheel after the other exhausts his or her available hours. The supply of available two-person teams is very tight, however.

The tentative compact, which is being referred to as a "handshake" or an "agreement in principle," calls for a $4.15-per-hour wage hike over five years for full-time Teamsters workers. In addition, the agreement establishes a classification of a full-time "combination driver," who will receive $20.50 an hour as a starting wage and max out at $34.79 an hour by Aug. 1, 2022. UPS' unionized part-timers will be paid a starting rate of $13 an hour, which will escalate to $15.50 as of the 2022 date.

In its communiqué, the Teamsters did not specify the responsibilities of the new class of driver. The union said, however, that the provision will resolve membership concerns over how the contract addresses the potential need to operate on Saturdays and Sundays. The company has never delivered on Sundays. However, increasing consumer demands for seven-day-a-week deliveries of online orders have pressured the company to consider it. After 110 years, the company just began U.S. ground deliveries on Saturday in early 2017.

According to the union, the tentative contract eliminates the contentious language floated during negotiations creating a classification of "hybrid" small-package drivers, who would deliver ground packages either Tuesday through Saturday or Sunday through Thursday, and who would be paid at the lower tier of a new two-tier wage scale.

However, Ken Paff, national organizer of the dissident group Teamsters for a Democratic Union (TDU), disputes the notion that the two-tier structure has been done away with. The top rate for the combination drivers will be about $6 less than what regular drivers will make at the end of the contract, thus the new drivers' wages will also be separate and unequal, Paff said.

Last night's tentative agreement covers the 256,000 UPS employees who are members of the Teamsters' small-package unit. Contract talks to cover about 11,000 workers at the company's UPS Freight less-than-truckload (LTL) unit are still going on. The two sides will meet July 9-12 in Minneapolis to continue the LTL talks, and to finalize the local parcel supplements and riders that remain unresolved. Once the local agreements are hammered out, two-person committees at each local will review the proposed master contract. It will then be sent to the rank and file for a ratification vote.

All locals must ratify their respective supplements and riders before the master contract can take effect. The last master contract was ratified in July 2013, but didn't take effect until the following April because several locals repeatedly refused to approve their supplements. The dispute didn't end until the Washington leadership in April 2014 took the extraordinary step of imposing the national contract on all UPS members.

In a statement, Denis Taylor, who heads the Teamsters' package division, called the agreement "among the best ever negotiated for UPS members." The company said in a separate statement that the agreement rewards its employees "for their contributions to its success while enabling the business to remain flexible to meet its customers' needs."

In early June, UPS and UPS Freight members voted to authorize the union to strike in the event that talks reached an insurmountable impasse. Although such a move is pro forma, it received widespread media attention and spurred some UPS customers to explore other delivery options in the event of service disruptions.

FedEx Corp., UPS' chief private sector rival, has said it will focus on the needs of its existing customers before entertaining requests to handle diverted freight. The company would not comment on how it would handle requests from customers that also use UPS' services. The U.S. Postal Service, which is both a competitor and partner of UPS for business-to-consumer (B2C) traffic, much of it coming from online orders, declined comment.

DHL Express, which does not operate domestic express services but serves the U.S. as part of its 220-country network, will try to accommodate businesses that use DHL and UPS, Greg Hewitt, DHL Express' U.S. CEO, said yesterday in an interview.