Will the Teamsters get tough with UPS?

Boston-based union leader Sean O’Brien, regarded as a firebrand by some, is running to replace James P. Hoffa, 80, who is retiring after five terms as the Teamsters union president.

An O’Brien win in this year’s election could mean trouble in 2023 for UPS, the union’s largest employer by far. Of UPS’s 534,000 employees, 340,000 are Teamster members. That’s 24% of the national union’s total membership of 1.4 million.

O’Brien is opposed by Steve Vairma, president of Denver Local 455, who is often seen as defending the departing Hoffa administration. O’Brien and others claim Hoffa conceded too much in negotiations with management – particularly UPS management.

Whoever wins this year’s Teamster election will lead the union into negotiations to succeed the five-year UPS contract that runs out on July 31, 2023.

The current contract established a two-tiered pay scale. Newer drivers are paid less than veterans, creating a perceived incentive for management to force out higher seniority people. Opponents of the concessions were outraged when the union’s constitution allowed the contract to be implemented despite an apparent vote against it. They’re still mad.

According to the Teamster constitution at the time, at least 50% of eligible Teamsters must vote for a contract to be approved or rejected by a simple majority. When less than half vote, at least two-thirds of those votes must be “no” for the contract to be rejected. In 2018, fewer than half of the voting members voted on the UPS contract. While 54% of them voted “no,” it was not enough under the two-thirds rule to turn down the contract. Despite loud protests, the contract was declared ratified.

The Teamster constitution has since been revised to eliminate the two-thirds-under-50% provision.

O’Brien, president of Boston Teamster Local 25, had been set to lead the UPS negotiations for the 2018 contract when Hoffa replaced him. O’Brien vehemently opposed the concessionary contract negotiated without him and began his run for national leadership. Now he faces Steve Vairma, who has been endorsed by Hoffa on his way out the door.

James P. Hoffa, who has led the Teamsters for 23 years, is the son of legendary Teamster leader James R. “Jimmy” Hoffa, allegedly assassinated in 1975 at the order of another Teamster leader, Anthony “Tony Pro” Provenzano of North Jersey local 560.

O’Brien isn’t the only problem for UPS. The package delivery giant also faces the prospect of less business from Amazon, its largest single customer by revenue.

Amazon has been building out its own transportation system. This year, the online sales behemoth clocked into Transport Topics Top 100 Private Carriers list for the first time, at No. 22.

O’Brien is worried that Amazon growth in package delivery will lead to actual competition with UPS. Both he and his opponent promise campaigns to organize Amazon workers. Earlier this year, a smaller union failed spectacularly in its attempt to organize workers at Amazon’s large Bessemer, Ala., facility. Amazon workers rejected representation by the Retail, Wholesale and Department Store Union by a more than 2-to-1 vote.

No matter who is elected the new Teamster president, UPS still faces a longstanding challenge to its position as the largest for-hire carrier in North America. FedEx has been slowly gaining on UPS for years. Last year, FedEx revenue was only 7% less than UPS’s. By comparison, the difference five years earlier was 19%.

Earlier this year, UPS sold its UPS Freight subsidiary to TFI International, a Montreal transportation holding company. In 2020, UPS Freight earned approximately $3 billion in gross revenue. That represents half of the almost $6 billion that separated UPS and FedEx last year. UPS CEO Carol Tomé seemed to anticipate a change in the company’s status as the biggest for-hire carrier as a result of the sale. Going forward, she said, UPS would strive to be better, not bigger.

In any case, Tomé could find herself toe-to-toe with a newly aggressive Teamsters union led by tough-talking Sean O’Brien. A Teamster walkout like the 16-day strike of 1997 would be a boon to nonunion FedEx. If the sale of UPS Freight doesn’t give the biggest-carrier title to FedEx in 2022, a Teamster strike in 2023 just might. LL