Wall Street Analyst: UPS got a cheap deal

April 25, 2014: Ken Hall promised, “The more they make, the more we take.” But Wall Street analysts say UPS will save $500 million in labor costs under the weak contract imposed by Hoffa and Hall. 

Wolfe Research, specializing in analysis of the transport industry, has this to say about the new contract:

“UPS’s new 5-yr labor contract with the Teamsters is finally set to take effect on Fri. and we believe it’s a good deal for UPS, with only ~3% annual wage inflation versus ~4% in its past 2 contracts.”

The analysis continued: “UPS announced after the market on Thursday that its new five-year labor agreement with the Teamsters (which was approved on a national level in June of 2013) will go into effect today (Friday) after the national negotiating committee voted to override the last three chapters that had been holding out for supplemental amendments. We estimate wages and benefits for full-time employees will increase by a compounded average of  about 3.4% annually over the five  years of the contract, below 4.1% in the prior two deals in ‘08 and ‘02. We estimate wages will increase 2.3% annually (vs. 2.7% and 3.3% the past two deals), while benefits are expected to increase 5.2% annually. On an absolute basis, UPS will be paying very similar wage and benefit increases to the Teamsters; but, off of  a higher base, the percent increases are lower. Assuming 125K full-time Teamster members and roughly assuming $100K in average annual income (wages + benefits), 3.4% annual wage inflation would save UPS approximately $85M in labor costs in year one and closer to $500M in compounded savings by the end of the contract.”

Get Advice Join TDU Donate

Recent News

Yellow Trims Losses: Best Quarter in Six Years

Yellow Corporation released its first quarter financials on May 10. The company shows strong improvement but is still not profitable. Yellow’s overall operating ratio of 99.3 percent is 3 percent better than a year ago, but well below other LTL carriers, including ABF and TForce.

 

Sysco Profits Up

Sysco Corp announced its quarterly financial report on May 10, with profits and revenue both up dramatically since last year.  Profits for the quarter were $303.33 million, up from $88.9 million last year. Revenue rose 43% from $11.8 billion to $16.9 billion.

View More News Posts