Benzinga - by AJ Fabino, Benzinga Staff Writer. The Teamsters union on Tuesday announced that it ratified a landmark five-year collective bargaining agreement with the United Parcel Service, Inc. (NYSE:UPS), marking one of the most significant labor accords in the company’s history.
What Happened: After months-long negotiations and looming threats of a massive labor strike, the Teamsters voted overwhelmingly, with an 86.3% approval rate, in favor of the agreement with UPS.
The new contract promises benefits to more than 340,000 UPS Teamsters nationwide, incorporating wage hikes for both full- and part-time workers, introducing workplace enhancements like vehicle air conditioning and ending enforced overtime on drivers’ off days.
It came on the heels of a tense period last month, where the union and UPS appeared to be at odds, raising concerns about potential disruptions in the U.S. parcel delivery sector.
UPS CEO Carol Tomé earlier this month emphasized the importance of the new agreement in reinstating labor certainty and appeasing the concerns of various stakeholders, including workers and shareholders.
The CEO highlighted that by the end of the contract, a typical full-time driver at UPS would be earning roughly $170,000 per year when combining both pay and benefits.
Read Also: Labor Market’s True Strength Under Microscope: Analyst Expects 500,000 Fewer Payrolls Wednesday
Why It Matters: The successful ratification avoids what could have been the largest labor strike in the U.S. in decades, an event that would have significantly impacted the nation’s supply chains given that UPS handles nearly 25% of all U.S. parcel volume.
The agreement serves as a notable precedent for labor negotiations in the logistics industry, highlighting the increasing assertiveness of labor unions.
While UPS can move forward without the specter of a strike, competitors including FedEx Corp (NYSE:FDX) and Amazon.com, Inc. (NASDAQ:AMZN) will likely be watching closely, gauging the potential ramifications for their own workforces and future union negotiations.
UPS Price Action: Shares of UPS are trading 0.67% higher during Tuesday's after-hours session to $166.86, according to Benzinga Pro.
Read Next: UPS’ Profit May Be Falling But It Will Still Give You $500 A Month
Photo: Shutterstock
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.