On August 4, 1997, the United Parcel Service (UPS) faced a massive strike involving 185,000 Teamsters members, which resulted in a 15-day shutdown of UPS operations, costing the company a staggering 600 million dollars. The strike was a triumph for the union, securing a new contract that granted wage increases, protected existing benefits, and enhanced job security. It was the largest strike in terms of striking workers that the country had witnessed, with the Teamsters Union paying out around $10 million to workers on picket lines during the strike.
For the cigar industry, the UPS strike posed challenges in logistics and shipping. Cigar manufacturers and retailers had to resort to alternatives like DHL, FedEx, and USPS to move cigars to retailers and consumers. Although these options were slower, they provided temporary solutions during the UPS disruption.
Fast forward to 2023, and UPS, now representing about 340,000 workers, has reached another contract agreement with the Teamsters union. The new deal includes a significant raise for existing part-time workers, increasing their hourly pay to at least $21, pending worker approval. Full-time workers will average an impressive $49 an hour, with current workers receiving $2.75 more an hour this year and $7.50 more an hour throughout the five-year contract. Additionally, the agreement aims to end mandatory overtime for drivers on their days off.
While the agreement puts to rest the prospect of a strike for the duration of the five-year deal, the increased labor costs raise concerns for the cigar industry. UPS is a publicly traded company, and its investors seek profitability. To cope with higher labor costs, the most apparent solution for UPS is to raise prices.
For the cigar industry, rising transportation costs present challenges in maintaining reasonable prices for consumers. As the cost of everything continues to soar, the impact of increased transportation costs trickles down to various industries, including cigars. During a period of economic uncertainty, luxury goods like cigars may face further challenges.
Given the intricate transit process cigars go through, it’s likely that we will witness additional price adjustments in the industry. While the UPS-Teamsters deal may ensure smoother shipping in the near future, cigar enthusiasts and businesses should be prepared for potential price adjustments in response to the changing economic landscape.
In the end, as the Teamsters celebrate a history victory put your seatbelts on for more price hikes, because as it turns out, the game has not changed, consumers will be unquestionably paying for it.