UPS CFO WARNS CARGO DIVERSION AS TEAMSTERS CONTRACT DEADLINE LOOMS
UPS Chief Financial Officer Scott Davis said the express carrier is beginning to feel the effects of its on-going labor contract negotiations with the International Brotherhood of Teamsters in the form of shrinking package freight volumes.
The carrier’s domestic volumes in April and May were about 2 percent below prior-year levels, consistent with the weakened economy. UPS’ volume declined by 4 percent in June. The carrier reported that U.S. domestic volumes for the second quarter overall declined 2.6 percent. UPS will release its second quarter earnings soon.
“We are grateful for the loyalty and confidence demonstrated by our customers,” said Davis in a statement Wednesday. “But we’ve said all along the risk of volume being diverted would increase the closer we got to contract expiration, and diversion will accelerate if there’s not agreement soon. It’s even more important the company and the union conclude these negotiations in a timely manner.”
UPS’ five-year labor contract with the Teamsters is due to expire on July 31. The duration of the new contract has not yet been determined.
Both UPS and the Teamsters said the labor contract negotiations are positive so far. “We’re making significant progress, but with a contract this large we still have a long way to go,” said Bret Caldwell, spokesman for the Teamsters. “We’re working hard to get a good contract for our members.”