UPS driver strike looms: Impact on U.S. economy

Yahoo Finance
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UPS ended labor negotiations with Teamsters on Wednesday, as we move closer to the contract deadline on July 31. Yahoo Finance Legal Reporter Alexis Keenan breaks down the economic impact of the potential strike.

Video Transcript

[AUDIO LOGO]

RACHELLE AKUFFO: A UPS driver strike is looming after labor negotiations collapsed on Wednesday. The negotiations stalled on new labor contracts and the slowdown of talks is raising the risk that more than 300,000 package delivery drivers and sorters will go on strike early next month. So what's at stake? Joining us now is Yahoo Finance's Alexis Keenan to give us the details. Hey, Alexis.

ALEXIS KEENAN: Hi, Rachelle. Yeah, so according to UPS, these fractured negotiations with the Teamsters Union that represents these workers over this new collective bargaining agreement that would be good for five years, they say it's a threat to the entire US economy. Now, the company's union workers, they include those who sort and deliver packages. And as you mentioned, 300,000-plus of these workers have already authorized a strike if there's no contract by the deadline of July 31.

Now, I've been trying to get my arms around both the potential for a strike, as well as the impact of these 340,000, let's say, workers not doing their jobs. Now, as for the economy and the supply chain concerns, UPS handles a total of 18.7 million domestic packages each day and 24.3 million package on a global basis. And in 2022, those numbers really dominated the parcel delivery market by revenue, as well as market share. The company held 37% market share in that year compared to FedEx with 33%, followed by UPS at 16% and Amazon Logistics at 12%.

Now, as for the weight of the union's threat of a strike, it's worth looking at the union's labor dispute that's been ongoing with the US's third-largest trucking company, and that's Yellow. And the company's been looking to modify its collective bargaining agreement with 22,000 workers. So a lot fewer workers, they're a smaller company. But its management in June had said that it could be out of money by August, and that's why they were looking to renegotiate their contracts looking at a possible need to file bankruptcy there. But take a listen to how the Teamsters' general president, Sean O'Brien, responded to that threat coming from Yellow.

SEAN O'BRIEN: It is not left for the Teamsters to save this company-- we have given enough. What happens next is out of our control.

- So O'Brien seemingly willing to jeopardize at least 22,000 union jobs there. And while Yellow is a smaller company than UPS with many fewer workers, it may be kind of a telltale sign of how unions have gained some power in these last few years and the uptick in union activity during the COVID-19 pandemic that seems to have carried forward to today, also looking at a tight labor market here as we speak that could give union a possibly an edge here.

But as of now, these negotiations are stalled, both sides saying that each other has walked away from the bargaining table and shares deteriorating on that news on Wednesday and still have not popped back up since their close-- on Monday was at about $183 a share. Now, looking-- hovering around $177 I last checked.

- Well, certainly. Thank you for getting us up to speed on that. I know you'll be following that story for us. Our very own Alexis Keenan there.

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