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UPS,Teamsters Expedite AC Rollout: What's Ahead on the Labor Front?
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Key Takeaways
UPS will retrofit 5,000 delivery trucks with AC by 2027 to improve driver safety and comfort.
A pilot program will test cargo-area cooling on 100 vehicles in high-heat regions.
The labor-friendly initiative aligns with UPS' 2023-2028 contract with Teamsters.
In a labor-friendly move, United Parcel Service (UPS - Free Report) has inked a new letter of agreement with the UPS Teamsters National Negotiating Committee to speed up the rollout of air-conditioned vehicles under its existing five-year (2023-2028) national contract.
As part of this effort, UPS will retrofit 5,000 existing package cars with air conditioning for delivery workers operating in the hottest regions of the country, a move expected to significantly improve driver safety, reduce heat-related stress and enhance overall working conditions.
Under the agreement, 5,000 package delivery vehicles will be fitted with air conditioning by June 1, 2027, with the first 2,000 vehicles completed by June 1, 2026. These vehicles will be deployed in the hottest delivery areas across the Southern and Southwestern United States. This initiative not only responds to longstanding worker safety concerns but is also expected to improve employee retention and morale due to better working conditions.
The agreement includes a pilot program to enhance cargo compartment cooling. Under this program, 100 vehicles will be upgraded to extend air conditioning into the cargo area. This pilot builds on UPS’ commitment in the 2023 National Master Agreement to improve cargo ventilation and is designed to test new strategies for mitigating extreme heat in the hottest part of the vehicle. The joint Teamsters/UPS Package Car Heat Committee will review the results of this pilot program.
This retrofitting initiative is part of UPS’ obligation to deliver 28,000 new air-conditioned vehicles under the existing national contract. Zone 1, the primary beneficiary of the program, includes UPS Teamsters in Alabama, Arizona, Arkansas, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas and Washington. This move is expected to provide substantial health, safety and productivity benefits for UPS employees working in high-heat regions.
UPS is in the process of streamlining the delivery network to align with lower parcel volumes, following the decision to trim its business with Amazon (AMZN - Free Report) . Earlier in the year, UPS’ management reached an agreement in principle with Amazon to lower the latter’s volume by more than 50% by June 2026. According to Carol Tome, UPS’ chief executive officer, Amazon was not its most profitable customer.
Labor problems are not uncommon at UPS’ rival, FedEx (FDX - Free Report) , as well. In June, multiple FedEx pilots picketed in Memphis, expressing frustration over contract negotiations. Pilots seek improvements in retirement benefits, pay, job security and other factors. Negotiations have been going on since 2021. Expressing disgust, the FedEx Master Executive Council of the Air Line Pilots Association, International, reached a consensus in August reflecting loss of confidence in Justin Brownlee’s (senior vice president, flight operations and airline planning) ability to manage Air Operations.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 31% so far this year, underperforming its industry.
YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, UPS trades at a 12-month forward price-to-earnings ratio of 12.18X, making it cheap compared with industrial levels.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for UPS’ third-quarter, fourth-quarter, full-year 2025 and 2026 earnings has been revised downward over the past 60 days.
Image: Bigstock
UPS,Teamsters Expedite AC Rollout: What's Ahead on the Labor Front?
Key Takeaways
In a labor-friendly move, United Parcel Service (UPS - Free Report) has inked a new letter of agreement with the UPS Teamsters National Negotiating Committee to speed up the rollout of air-conditioned vehicles under its existing five-year (2023-2028) national contract.
As part of this effort, UPS will retrofit 5,000 existing package cars with air conditioning for delivery workers operating in the hottest regions of the country, a move expected to significantly improve driver safety, reduce heat-related stress and enhance overall working conditions.
Under the agreement, 5,000 package delivery vehicles will be fitted with air conditioning by June 1, 2027, with the first 2,000 vehicles completed by June 1, 2026. These vehicles will be deployed in the hottest delivery areas across the Southern and Southwestern United States. This initiative not only responds to longstanding worker safety concerns but is also expected to improve employee retention and morale due to better working conditions.
The agreement includes a pilot program to enhance cargo compartment cooling. Under this program, 100 vehicles will be upgraded to extend air conditioning into the cargo area. This pilot builds on UPS’ commitment in the 2023 National Master Agreement to improve cargo ventilation and is designed to test new strategies for mitigating extreme heat in the hottest part of the vehicle. The joint Teamsters/UPS Package Car Heat Committee will review the results of this pilot program.
This retrofitting initiative is part of UPS’ obligation to deliver 28,000 new air-conditioned vehicles under the existing national contract. Zone 1, the primary beneficiary of the program, includes UPS Teamsters in Alabama, Arizona, Arkansas, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, South Carolina, Tennessee, Texas and Washington. This move is expected to provide substantial health, safety and productivity benefits for UPS employees working in high-heat regions.
UPS is in the process of streamlining the delivery network to align with lower parcel volumes, following the decision to trim its business with Amazon (AMZN - Free Report) . Earlier in the year, UPS’ management reached an agreement in principle with Amazon to lower the latter’s volume by more than 50% by June 2026. According to Carol Tome, UPS’ chief executive officer, Amazon was not its most profitable customer.
Labor problems are not uncommon at UPS’ rival, FedEx (FDX - Free Report) , as well. In June, multiple FedEx pilots picketed in Memphis, expressing frustration over contract negotiations. Pilots seek improvements in retirement benefits, pay, job security and other factors. Negotiations have been going on since 2021. Expressing disgust, the FedEx Master Executive Council of the Air Line Pilots Association, International, reached a consensus in August reflecting loss of confidence in Justin Brownlee’s (senior vice president, flight operations and airline planning) ability to manage Air Operations.
UPS’ Price Performance, Valuation & Estimates
Shares of UPS have declined in excess of 31% so far this year, underperforming its industry.
YTD Price Performance
From a valuation standpoint, UPS trades at a 12-month forward price-to-earnings ratio of 12.18X, making it cheap compared with industrial levels.
The Zacks Consensus Estimate for UPS’ third-quarter, fourth-quarter, full-year 2025 and 2026 earnings has been revised downward over the past 60 days.
UPS’ Zacks Rank
UPS currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.