UPS and Teamsters Union Reach Deal, Cigar Shipments Unlikely to be Affected

Earlier today, leadership for UPS and the International Brotherhood of Teamsters announced that they had agreed to a new five-year labor deal, averting a potential strike that could have unique impacts on the U.S. cigar market.

The current labor deal is set to expire on July 31. After reaching preliminary agreements about many of the non-monetary components like air conditioning in the UPS delivery vehicles, the two sides were unable to come to an agreement about the monetary parts of a new deal leading to a breakdown of negotiations on July 5. Talks resumed this week and, fortunately, quickly resolved the differences.

The agreement is still subject to voting and ratification by the 340,000 members, a process that will run from Aug. 3-22. Should the union membership reject the agreement, a strike could still happen, likely in late August.

“Together we reached a win-win-win agreement on the issues that are important to Teamsters leadership, our employees and to UPS and our customers,” said Carol Tomé, UPS chief executive officer, in a statement. “This agreement continues to reward UPS’s full- and part-time employees with industry-leading pay and benefits while retaining the flexibility we need to stay competitive, serve our customers and keep our business strong.”

The news is notable for the premium cigar industry as UPS is the primary carrier for many manufacturers as they ship their products from their warehouses to retail stores across the country. FedEx stopped the shipment of tobacco products in early 2016. USPS, the third main courier in the U.S., still allows for the shipments of cigars.

With the 2023 PCA Convention & Trade Show just recently completed, a good number of those shipments would have contained new cigars, while there were also likely plenty of shipments containing replenishments of cigars as many shops around the country are in their prime selling season.

While no cigar companies announced plans for what would happen should a strike occur, one said it was taking the possibility of a strike into consideration and possibly bumping up its shipments in order to ensure they arrive ahead of the potential Aug. 1 strike. Most other companies said they were taking a wait-and-see approach when asked how a strike would affect their shipping plans.

The threat of a potential strike spurred the Premium Cigar Association (PCA) to call on President Biden to intervene, saying in a July 20th letter that it could have “devastating consequences for our industry and the broader economy.”

“Our industry relies heavily on efficient logistics and timely deliveries, and any disruption in UPS services would be felt severely by our member businesses and customers. This is due to UPS being the only reliable private sector service that ships premium cigars,” wrote Scott Pearce, executive director of the PCA, in that letter.

At the core of the issues between the two sides were pay increases, particularly for part-time workers as well as a reduction in pay gaps between two different classes of UPS workers. These issues were magnified as UPS enjoyed strong results during the pandemic while union leadership argued UPS workers were putting their health on the line. Other issues included providing air conditioning in delivery vans, mandatory overtime and pay for part-time workers.

“Rank-and-file UPS Teamsters sacrificed everything to get this country through a pandemic and enabled UPS to reap record-setting profits,” said Sean M. O’Brien, general president of the International Brotherhood of Teamsters, in a press release. “Teamster labor moves America. The union went into this fight committed to winning for our members. We demanded the best contract in the history of UPS, and we got it. UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers.”