UPS, Teamsters Reach Agreement on New Contract

United Parcel Service and the International Brotherhood of Teamsters have reached an agreement over a five-year labor contract, preventing a potential strike by roughly 330,000 package-delivery drivers and package sorters. 

The labor union said the contract was worth around $30 billion overall. The agreement still has to be ratified by employees.

“This contract sets a new standard in the labor movement and raises the bar for all workers,” Teamsters General President Sean O’Brien said.

The UPS-Teamsters contract is the largest collective-bargaining agreement involving a private employer in North America, and a strike could have harmed the supply chains of many companies. UPS moves approximately 5% of the nation’s gross domestic product—or roughly $3.8 billion of goods every day, according to the U.S. Chamber of Commerce. President Biden on Tuesday congratulated the union and company on working out their differences at the bargaining table.

A dispute that was holding up negotiations in recent weeks was over wages for part-time workers. The Teamsters were seeking an hourly wage for part-time workers north of $20.

Under the agreement, UPS would pay new part-time workers a wage of $21 an hour, the Teamsters said. Currently, starting part-time hourly wages are $16.20 and could be higher in places where there is more competition for labor.

Existing workers would get a raise of $7.50 an hour over the life of the contract, including a $2.75-an-hour pay bump this year. Workers’ wages rose roughly $5.30 an hour in the five-year deal that runs through July 31.

Earlier this month, the company and union each accused the other of walking away from contract talks, which have been under way since May. The Teamsters-represented workers voted to authorize a strike if a new agreement wasn’t reached.

“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,” said UPS Chief Executive Carol Tomé.

Shares in UPS surged briefly after media reports about the agreement but closed Tuesday trading down 1.9%.

Shippers were monitoring the progress of negotiations to determine whether they would need to find alternatives to UPS in the event of a labor disruption. The Retail Industry Leaders Association, an industry trade group, said the agreement was “an enormous relief to retailers, who have been navigating the possibility of a strike and the associated uncertainty for weeks.”

“We encourage a quick ratification and adoption of the agreement to ensure this chapter of uncertainty is closed,” the retail group added.

Write to Esther Fung at [email protected]

Corrections & Amplifications
Existing UPS workers would get a raise of $7.50 an hour over the life of the contract, including a $2.75-an-hour pay bump this year. An earlier version of this article incorrectly said workers would get a $2.75-an-hour increase this year and an additional increase of $7.50 an hour over the life of the contract. (Corrected on July 25)