BY MARK B. SOLOMON, EXECUTIVE EDITOR – NEWS
INTERMODAL
Transportation Report
THE RELATIONSHIP BETWEEN UPS INC. AND THE NATION’S RAILROADS
goes back decades. Like all long relationships, it has been marked by high expectations,
successes, disappointments, major investments of time and money, and a fair amount
of tension. Through it all, UPS remains a core rail customer, though it is believed to no
longer be the largest individual user, a status it held for many years.
The up-and-down marriage could face its severest test yet. The catalyst is language in
a tentative five-year labor contract between Atlanta-based UPS and the Teamsters union
that would divert traffic from the rails to an expanded network of two-person over-the-road sleeper teams run by UPS and staffed by union drivers. The contract’s terms do
not quantify the level of diversion, but the Teamsters have characterized it as significant.
In 2017, UPS moved 750,000 pieces of equipment, most of that 53-foot boxes, in
intermodal service and spent about $1 billion with the rails, according to estimates
from SJ Consulting, a consulting firm. UPS, which zealously guards its competitive
data, would not disclose how much intermodal business it gives the railroads. It also
would not comment on the contract’s language because it was still in proposal form as
of the end of August when this story was written. UPS’s 256,000 unionized small-pack-age workers are expected to vote sometime this month to ratify the five-year master
contract, along with its numerous regional and local supplements and riders. None
of the four major east-west railroads—Union Pacific Corp., BNSF Railway Co., CSX
Corp., and Norfolk Southern Corp.—would comment for this story.
What is known is that UPS has pledged to recruit 2,000 drivers for the expanded
sleeper network, starting with 200 drivers by the end of calendar 2019 and the remainder spread out, in one-quarter annualized increments over the contract’s life, until
the threshold is reached. Sleeper teams are not new to UPS, and each of the recent
Teamster contracts has given the company more flexibility to deploy them, according to a source close to the company. This means UPS can improve its transit times
through more direct routings and can do so in an economical fashion—no small feat
in light of the cost headwinds of moving goods via truck versus rail. UPS is investing
The contract
between UPS and
the Teamsters calls
for shifting part of
Big Brown’s traffic
from intermodal to
over-the-road. Is this
a wake-up call for
the railroads?
Off the rails
