As the July 31 deadline for a new contract with the Teamsters union looms just three weeks away, United Parcel Service says it is seeing diversion of package volume to competitors.

According to Chief Financial Officer Scott Davis, UPS's business began to show the effects of the unresolved labor negotiations in June. U.S. domestic volume levels in April and May were running approximately 2% below prior-year levels, consistent with the economy's general weakness. In June, the volume decline was 4%. As a result, U.S. domestic volume for the second quarter declined 2.6%.
"We've said all along the risk of volume being diverted would increase the closer we got to contract expiration," Davis said,"and diversion will accelerate if there's no agreement soon. It's even more important the company and the union conclude these negotiations in a timely manner."
According to some published reports, the diversion of freight could lead to the loss of thousands of union jobs at UPS.
Meanwhile, Teamsters General Secretary-Treasurer Tom Keegel told UPS negotiators that now is the time to “get serious.”
The Teamsters said negotiators remain far apart on issues such as health care and pensions as economic proposals and counter-proposals go back and forth between UPS and union negotiators.
“We are dealing with one of the most profitable corporations in America—this is not a company in decline,” Keegel said. “We expect proposals that protect our health coverage and our pensions.”