United Parcel Service will lay off 333 of its workers now employed at its Ontario International Air Hub a little over five weeks from now, the Sentinel has learned.
Rumors to the effect that the cargo handler was going to engage in some downsizing locally had begun to spread in February, after dire developments and announcements in late January. Confirmation of that came in a notice the company made to the California Employment Development Department on March 6.
According to information available to the Sentinel, the action that United Parcel Service will take extends to the total elimination of a single shift at the hub.
“We often evaluate our operations and flex our network to meet volume demands,” United Parcel Services announced on March 13. “This allows us to continue delivering industry-leading service while also maintaining competitive prices.”
While many sectors of the U.S. and international economy suffered during the COVID pandemic that hammered society beginning in March of 2020, cargo transport and both internet sale/telephone sale delivery of products increased, an economic reality that was reflected locally.
In 2019, the last full year prior to the coronavirus panic that gripped the world and nation, resulting in mandates put in place by the State of California which shuttered many businesses, the freight handled at Ontario International Airport, including that by UPS,  Amazon Prime Air and Federal Express stood at 781,993 tons. In 2020, with the onset of the pandemic and the need for consumers and businesses to take advantage of e-commerce sources for household goods, materials and supplies, Ontario International saw phenomenal growth in its cargo operations, moving toward but not quite eclipsing the million-ton threshold, as 924,160 tons of merchandise was transported through the airport that year. With the passage of the critical phase of the pandemic and the advent of vaccines that resulted in the withdrawal of government restrictions, the level of e-commerce declined in 2021, and the tonnage through the airport dropped as well, to a yet impressive 890,383 tons. In 2022, the number again declined, to 853,165 tons. In 2023, Ontario International had returned to its pre-pandemic level of cargo transport, at 752,199.
That alone might account for the decision by United Parcel Service to constrict its operations, but it does not. Last year, in particular, the company, as profitable as it is, was hit hard by labor unrest, whereupon it made some major concessions. While a good number of those who work for United Parcel Service have grounds to celebrate the company’s compromise on the union’s terms, many do not.
There are three distinct classes of United Parcel Service employees: administrative/management, truck drivers and warehouse workers. Management and truck drivers employed by United Parcel Service do quite well for themselves. Warehouse workers, on the other hand, are not as fortunate.
Full-time small package delivery drivers receive an average total compensation package of $145,000 per year. Long-haul team drivers receive an average total compensation of $172,000 per year. United Parcel Service pays its drivers $0.95 per mile after four years.
Experienced United Parcel Service warehouse workers earn an average salary of $36,000 per year. Pay varies in large measure by location, as well as according to job title and skill demands. Warehouse workers in California earn something higher than the average, between $39,000 and $41,000 per year. Benefits of $12,000 to $14,000 per year added to salaries bring an average California warehouse worker to roughly $51,000 to $55,000 per year in total annual compensation.
After considerable labor unrest that began in 2022 and which intensified during the first half of 2023, with the Teamsters, the union representing United Parcel Service truck drivers, threatening a work stoppage that carried with it the prospect of destroying the company, a Teamsters vote in August ratified the company’s acceptance of a five-year contract. When that five-year pact sunsets, United Parcel Service drivers will be earning an average of $170,000 in annual pay and benefits per year, and those who are provided with new trucks beyond the existing fleet, will work in air-conditioned luxury. Moreover, though to the end of the contract, those drivers will have relative job security.
The deal applies to the roughly 340,000 of United Parcel Service’s employees who drive trucks. At the beginning of 2021, the number of United Parcel Service employees had reached an all-time peak of roughly 540,000. Those ranks have declined to less than half of a million at this point, somewhere near 495,000. The lion’s share of the company’s remaining workers, over 152,000 warehouse workers, were given relative short shrift in the arrangement.
Some six months after the signing of the deal with the Teamsters, senior United Parcel Service corporate officers on January 30 said the company, which had seen its profits in the fourth quarter of 2023 plunge to $1.61 billion from $3.45 billion in the third quarter of 2023, was going to cut 12,000 jobs throughout the country.
The Ontario International Air Hub’s share of those amounts to 333. According to what United Parcel Service told the California Employment Development Department, the pink slips are being handed out because of a “volume loss in our network.”
United Parcel Service stock, while not exactly tanking, has not been doing well lately, with shares down by more than 15 percent over what they were in 2023. United Parcel service projected 2024 revenue of $92 billion to $94.5 billion, at least a billion dollars off of Wall Street’s expectation for something beyond $95.5 billion. Corporate honchos are concerned that a weak profit showing in the months ahead could trigger a massive stock sell-off that would prove highly damaging to the company, which is locked in a battle for survival against the likes of Amazon Prime Air and Federal Express and DHL.
Terminating 12,000 mostly warehouse positions will cut nearly $1 billion in overhead for the company.
United Parcel Service might have been able to sustain the greater operating costs necessitated by the concession made to the Teamsters without shrinking the company, but its decline in volume and accompanying downturn in revenue made that impossible.
There is no little irony in the consideration that of those who are to lose their jobs at the 775,000-square-foot Ontario distribution facility, many are represented by the Teamsters, that being the Teamsters Local 63, based in Rialto. Also getting the sack are a number of non-union workers. Those who will be headed to the unemployment office or pounding the pavement looking for jobs elsewhere are 26 supervisors, 131 loaders and unloaders, sometimes referred to as “swampers,” and 176 others who are engaged in the hub’s operations.
According to Teamster Local 63’s existing contract with United Parcel Service, a displaced union worker can invoke his so-called “bumping right,” and replace a non-union employee elsewhere yet employed by United Parcel Service, but that is fraught with other considerations, such as where those other employees work and whether the employee looking to do the bumping has the skill level to assume the tasks held by the non-union employee. Some United Parcel Service operations are close enough for those employed at Ontario to seek employment there – such as the company’s facilities in Fontana, Rancho Cucamonga and Rialto. However, it is not yet fully known to what degree those operations will lose positions dictated on high by the corporation.