United Parcel Service Inc. (NYSE: UPS) said Friday morning that the company has reached a tentative agreement with the Teamsters union on a five-year contract covering union employees involved in small package deliveries. The agreement remains subject to ratification by the UPS employees.
The union represents about 260,000 UPS employees, and if the agreement is ratified the company would dodge its first strike since 1997. The handshake agreement does not cover about 11,000 UPS employees in the UPS Freight network who are also represented by the Teamsters.
The current union contract expires July 31 and the new contract, if ratified, would take effect on August 1st.
In its own announcement of the deal, the union specifically called out four economic highlights in the agreement. First, the two-tier wage structure for part-time drivers has been eliminated and their starting wage will rise to $13 an hour and reach $15.50 in 2022. Current part-time employees will receive a general wage increase totaling $4.15 an hour over the term of the contract.
Second, the union noted “substantial increases” to UPS contributions to employee benefit funds and increased pension benefits.
Third, a general wage increase of $4.15 an hour over the contract term and a new driver classification designated as full-time combination driver with a starting wage of $20.50 and a top rate of $34.79 by August 2022.
Fourth, a “significant increase” in the new hire progression for sleeper teams and provision to “pull many loads that are currently moved by railroad off of the rails and move those loads to newly created sleeper teams.” The union said this would create 2,000 new full-time positions in the highest paid jobs for union employees at UPS.
Teamsters co-chairman of the national negotiating committee, Denis Taylor, said:
I am confident that once the membership has reviewed and understood the changes, they will see that this agreement is among the very best ever negotiated for UPS members.
In Friday’s premarket session UPS stock traded up about 1.2%, at $114.70 in a 52-week range of $101.45 to $135.53. The 12-month consensus price target on the stock is $124.36.