By Lisa Baertlein and Priyamvada C
(Reuters) -U.S. workers at United Parcel Service have ratified a new five-year contract, the Teamsters union said on Tuesday, closing the door on a potential strike that could have put timely Christmas deliveries in doubt and sent shipping costs soaring.
Atlanta-based UPS, the world's largest package delivery company, handles about a quarter of U.S. parcel deliveries and serves virtually every city and town in the nation.
An overwhelming 86.3% of voting members chose to ratify the agreement that covers UPS workers in the U.S., of which there are about 340,000, according to the International Brotherhood of Teamsters.
"The agreement passed by the highest vote for a contract in the history of the Teamsters at UPS," the union said. The Teamsters did not say what percentage of members voted.
The deal raises pay and eliminates a two-tier wage system for drivers. It also provides another paid holiday, ends forced overtime and adds air conditioning to new models of the company's ubiquitous brown trucks starting next year.
Ending seniority-based wage tiers that pay new hires less than veteran workers is also a central issue for the UAW-Detroit Three labor talks. UPS is the nation's largest private-sector employer of unionized workers and ending the labor cost-saving scheme there could be a big win for unions and a possible blow to companies.
“Teamsters have set a new standard and raised the bar for pay, benefits, and working conditions in the package delivery industry. This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon better pay attention," Teamsters General President Sean M. O’Brien said in a statement.
Unions representing "essential" transportation workers including pilots, port workers and delivery drivers are enjoying enhanced bargaining power due to the tight labor market and stronger public support for unions.
In July, pilots at UPS rival FedEx rejected their tentative contract.
UPS cut its full-year revenue and profitability targets earlier this month, citing higher-than-expected labor costs and business lost during the tumultuous contract talks with the Teamsters.
Under the contract deal, current full- and part-time workers will get $2.75 more per hour in 2023, and $7.50 more per hour over the length of the contract, according to the Teamsters.
General wage increases for part-time workers double the amount obtained in the previous UPS Teamsters contract - and existing part-time workers receive a 48% average total wage bump, addressing a key sticking point in talks, the union said.
(Reporting by Lisa Baertlein in Los Angeles and Priyamvada C in Bengaluru; Editing by Paul Simao and David Gregorio)
