Jay’s Parcel Notes: July 12 – July 26

I’m Jay Kent, managing director of SLB Performance, a consulting firm that helps companies reduce supply chain costs, implement BI tools, and improve in-stocks and customer service.  After 25 years of leading some of the most complex supply chains in the industry, I began advising companies in multiple industries and verticals. To mitigate costs and improve efficiencies, it’s important to understand the market. So twice a month, I’ll share parcel news and thoughts.

There’s a big sigh of relief in the parcel market as UPS and the Teamsters reached a tentative agreement yesterday.

Prior to the agreement, FedEx issued a statement early yesterday morning: “In the event of an industry disruption, FedEx Corporation’s priority is protecting capacity and service for existing customers. Contingency plans will be implemented in the event of a sudden and significant increase in package volume. We will take measures to leverage and protect our flexible network for critical supply chain needs while also prioritizing capacity for existing customers.”

Well, now they will not have to worry about an industry disruption…😉

“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.” – Teamsters General President Sean M. O’Brien.

According to the Teamsters’ press release, some of the agreements reached were:

  •  Existing full- and part-time UPS Teamsters will get $2.75 more per hour in 2023 and $7.50 more per hour over the length of the contract.
  • Existing part-timers will be raised 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.
  • 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.
  • Current UPS Teamsters working part-time would receive longevity wage increases of up to $1.50 per hour on top of new hourly raises, compounding their earnings.
  • The creation of 7,500 new full-time Teamster jobs at UPS and the fulfillment of 22,500 open positions, establishing more opportunities through the life of the agreement for part-timers to transition to full-time work.

Statement from UPS: “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,” said Carol Tomé, UPS chief executive officer. “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 contract will now go to union members to vote on. The voting process is likely to last until late August.

In the meantime, if and when the contract is ratified, expect a steep 2024 GRI increase and increases in surcharges.

UPS reports Q2 earnings on Aug 8. I’m sure we’ll hear more during the earnings call.

In other news, yes, there was other news…

FedEx Express pilots voted down the tentative agreement reached by its union and FedEx Express. “Our members have spoken, and we will now regroup and prepare for the next steps. In the coming weeks, the FedEx ALPA leadership will meet to establish a timeline for assessing pilot group priorities moving forward. FedEx pilots remain unified, and that will drive a new path that will help produce an agreement that all FedEx pilots will be proud to support,” said Capt. Chris Norman, FedEx ALPA chair, in a statement.

  • FedEx also issued a statement – “The tentative agreement voting results have no impact on our service as we continue delivering for our customers around the world. The parties will return to negotiations under the supervision of the National Mediation Board. While we are disappointed in these voting results, FedEx will continue to bargain in good faith with our pilots to achieve an agreement that is fair for all FedEx stakeholders.”

At long last, OnTrac finally expanded into Dallas-Fort Worth, Austin, Houston, and San Antonio. The company is now able to reach 80% of the US. The company established a sortation hub in Dallas that will be the primary injection point for packages in the state while facilitating deliveries to area residents. As noted in the press release, last summer, OnTrac launched a transcontinental delivery service, which connects its East and West Coast delivery footprints to move packages from coast to coast in as little as three days. Texas will serve as a critical connection point between the complementary operating networks, enabling retailers and shippers to leverage OnTrac to reach more of their customers across the country’s most populated areas.

That’s it for now. Comments are always welcome. Let me know what I missed. Stay tuned for the next newsletter on Aug 16.