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June 25 2018

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6 The Journal of Commerce | June 25 2018 Spotlight Whether the Teamsters union makes good on its strike threat against UPS may hinge on whether the union and employer can learn to sing from the same hymnal on Sunday deliveries. Sunday delivery is a major issue in contract talks between the largest US transportation company and the union, which has 260,000 rank-and-file members at UPS and its less- than-truckload (LTL) subsidiary, UPS Freight. Those members on June 5 gave the union the authority to strike if negotiations fail to produce a new five-year contract by July 31. That authorization vote doesn't mean a strike is imminent, but it does torque the tension between the union and UPS as the July 31 deadline to reach a deal draws nearer. However, even the prospect of a strike against the largest US transportation company is enough to shake shippers already worried about tight transportation capacity in the United States this summer and autumn. "It feels a little like 1997," said one UPS customer, an apparel shipper, referring to a 15-day strike against UPS by the Teamsters that year that cost the company at least $620 million in lost business. That was the last Teamsters strike against UPS, the union's largest employer. This isn't 1997, though. Neither the Teamsters nor UPS are what they were then. And there's no single overriding issue this year, though the Sunday delivery question may come close. In 1997, the Teamsters fought tooth-and-nail for the creation of more full-time jobs and won. Part- time jobs and pay levels and wage progression still are major issues today, especially as states across the country either raise their minimum wages or consider increases. The Teamsters are likely to demand a high price for delivering packages on Sunday, a growing demand of online consumers and one big Seattle-based e-commerce customer. There are many issues on the bargaining table, including minimum pay and working hours, but the trend toward 24/7 delivery operations is one of the gnarliest issues facing UPS and the union. That's because it involves a substantial amount of money. UPS launched Saturday delivery and pickup service in April last year. Under the current contract, UPS package car drivers work Monday through Friday and receive overtime pay for that weekend work. At the same time, adding Saturday to the work week helped UPS better utilize assets across its package network. Packages shipped Saturday could be delivered Monday, which UPS last year hailed as one of the biggest transit-time improvements in its network. "The addition of another ground operations day more efficiently utilizes our existing delivery network and offers customers an even faster ground delivery solution," Teresa Finley, chief marketing officer, said at the time. The debate is a sign of how much the transportation landscape has changed since the last UPS-Teamsters contract was approved in 2013, let alone the last Teamsters strike against UPS in 1997. E-commerce was in its infancy then; Amazon sold its first book online in 1995. Amazon Prime wouldn't introduce "two-day free shipping" for another 10 years. In 2013, however, Amazon and the US Postal Service (USPS) struck a landmark deal to deliver certain Amazon packages on Sundays. The USPS also delivers packages that UPS and FedEx feed into its delivery network via FedEx Smartpost and UPS Surepost. Last autumn, the USPS went further, testing delivery of goods ordered from stores on Saturday to homes on Sunday. All those packages, whether delivered on Sunday or during the week, increased the postal service's shipping revenue by $445 million year over year in the last quarter, a 9.5 percent gain. "This is the world of today," said Satish Jindel, president of SJ Consulting Group. "People are working all different hours and schedules, around the world, not just Monday to Friday." UPS and the Teamsters reportedly have discussed adding "hybrid drivers" to the UPS fleet. According to news reports, those drivers would be part-time workers who would work Sunday through Thursday or Tuesday through Saturday, at a minimum rate of $15 an hour. That proposal, floated by union negotiators, was attacked by Teamsters advocating a harder line. — Bill Cassidy Executive Editor, The Journal of Commerce and JOC Events: Chris Brooks 609 649 2181, Executive Editor, The Journal of Commerce and Mark Szakonyi 202 872 1234, Managing Editor: Barbara Wyker 908 777 3217, Senior Editors: William B. Cassidy Trucking and Domestic Transportation 202 872 1228, Bill Mongelluzzo West Coast 562 428 5999, Hugh Morley Northeast, Mexico 646 679 3475, Eric Johnson Technology 213 444 9326, Greg Knowler Europe Editor, Maritime & Trade, IHS Markit +44 7976798770, Turloch Mooney Global Ports, Maritime & Trade, IHS Markit +852 9011 9109, Associate Editor: Ari Ashe Southeast Ports, Intermodal Rail 202 548 7895, Web Editor: Joseph Lazzaro 917 309 0148, Data Analyst: Dustin Braden 646 679 3450, Senior Content Editor: Alessandra Gregory Barrett, 860 248 5238 Senior Designer: Sue Abt, 862 371 3534, Designer: Bryan Boyd, 908 910 7849, Publisher: Tony Stein, 770 295 8809, Sales: Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954 551 8305 Zachary Gorman, Account Executive Northeast, Illinois sales 646 679 3466 Jean Gibbons, Senior Sales Executive West Coast, Midwest sales, 706 469 7160 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Alex Remstein, Associate Sales Specialist Reprints/Classifieds/Copyrights, 646 679 3418 For Magazine Subscription Customer Service: 450 West 33rd St., 5th Floor, New York, N.Y. 10001 973 776 8660 • 800 952 3839 Managing Director, Media and Events, Maritime & Trade, IHS Markit, Rhiannon James Senior Director, Content, Maritime & Trade, IHS Markit, Peter Tirschwell Director, Media & Events, Maritime & Trade, IHS Markit, Amy Middlebrook Manager, Production, Carmen Verenna Product Manager, JOC, Jesse Case The Journal of Commerce ©2018 The Journal of Commerce — All Rights Reserved For more information, visit our website, The Teamsters rank-and-file has given the union the authority to strike if a new contract isn't reached by July 31. Teamsters threaten strike against UPS

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