- Since 2015, UPS has used seasonal hires who deliver packages in their own cars during peak times.
- CEO Carol Tomé is “leaning in” to the practice one union driver called the “Uber-ization of our job.”
- With contract talks on the horizon, the Personal Vehicle Driver program is a major point of tension.
- See more stories on Insider’s business page.
When UPS CEO Carol Tomé and her executive team gathered for a shareholder meeting last month, they fielded the sorts of questions one might expect, around capital expenditures, debt reduction, and the like. Then came the query that someone unfamiliar with the company’s inner workings wouldn’t expect.
“Some questions have come in regarding the state of our package cars and why are they allowed to go out on the road, and they are not fully cleaned,” said the investor relations head Scott Childress.
“There is no excuse for a dirty package car,” Tomé said, assuring the questioners that all UPS facilities were aware of washing standards and that she had increased the budget for this task in 2021. “We will ensure the appearance of our package car reflects positively on our brand,” she said, according to a transcript from Sentieo.
The issue of dirty trucks was addressed with the kind of weight and sincerity that commercial-vehicle maintenance doesn’t often generate. That’s because the clean, shiny, brown UPS truck isn’t just essential to UPS operations. It’s a central pillar of the 114-year-old brand, inside the company and out.
Tomé has waxed poetic about the “Big Brown” image since taking the CEO spot in June 2020, after 15 years on the company’s board of directors and 18 as chief financial officer of Home Depot.
But the first leader in UPS’ history not elevated from within its ranks isn’t afraid of new routes. She sold off UPS Freight, the company’s trucking subsidiary that has historically been a margin drag. She has reoriented the company from a focus on carrying the most packages to targeting the packages that carry the most profit. She has relaxed driver-appearance standards to allow all hairstyles, beards, and visible tattoos.
But with one move in particular, Tomé has pleased investors and infuriated the full-time, unionized drivers who form the public face of her company. And it hinges on a departure from the big brown truck itself. UPS calls it the Personal Vehicle Driver.
PVDs, as they’re known inside UPS, are a familiar concept in a delivery world increasingly run on gig-economy labor. These temporary workers supplement or work in tandem with the company’s uniform-clad, full-time drivers, delivering packages while wearing their own clothes and driving their own cars.
UPS considers the program, which allows it to handle increased volume without committing much capital, key to getting through the surge that hits every holiday season. In peak season 2020, Tomé reported, UPS saved itself $92 million by bringing in 39,000 PVDs.
Now the CEO wants to expand on that success. “This is something that really worked very well, and we’re going to lean into this as we think about peaks of the future,” she said on a February earnings call.
But some drivers disapprove of the program on principle, disagree with executives’ assessment of its effectiveness, and dislike what it means for the future of the company they’ve helped build.
“I look at it as an Uber-ization of our job,” said a New England-based driver who’s been delivering packages for UPS for seven years.
A new look for UPS
UPS first hired PVDs during the 2015 holiday season, and the program became a major point in 2018 negotiations between the company and the Teamsters union, which represents its drivers, according to four union drivers working in four different states and three former managers whom Insider interviewed. Under the resulting contract, UPS can hire PVDs as seasonal laborers, as long as it gives priority to union employees.
Supplemental agreements specific to states or regions put firmer guardrails around when and how PVDs and other seasonal workers may be hired. They’re generally restricted to the holiday rush between November 1 and January 15, though local union representatives can approve exceptions.
This isn’t totally new ground for UPS, which has used contractors to pick up time-sensitive next-day air service packages for many years. But company leadership appears to have broader ambitions for the PVD program.
In October 2019 (before Tomé came in as CEO), UPS Chief Information and Engineering Officer Juan Perez described “an extended, more impactful Personal Vehicle Driver model.” After that year’s holiday season, PVDs stuck around into the new year, even as the company instituted a hiring freeze for uniformed drivers, three drivers in three states said.
A full-time union driver in Minnesota with two years on the job told Insider that in 2020, PVDs kept working through May and started again in late October. A UPS spokesperson declined to confirm a hiring freeze was in place or provide a number of PVDs working at any given time beyond Tomé’s public comments.
Unlike the contract workers who move packages for FedEx and Amazon, UPS drivers work for the company itself and are unionized. Even with the looser appearance standards, those workers are expected to uphold the legacy of a brand built on professional-looking drivers operating clean, shiny trucks.
Tomé’s move toward drivers moving packages in their own cars represents a “massive cultural shift” for the company, said Glenn Gooding, president of iDrive Logistics, who spent 21 years with UPS. “It’s consistent, I think, with the fact that we have a CEO who is not a legacy UPS-er running now.”
Some drivers and former managers told Insider they see that shift as eroding the UPS brand.
“They’re setting a precedent. The CEO came in, used the PVDs … and said, ‘Look how much we’re able to take from the overhead. Look how much we can save in the long run,'” the New England driver said. “They probably did look at the risk, and the risk is lower than the benefit.”
Trouble brewing in Union-ville
In recent years, PVDs have been used to supplement trucks on their routes during peak times. In some cases, the PVD meets a driver somewhere on their route. They fill up the personal vehicle from the brown van, and the PVD completes deliveries on the same route as the driver, circling back to take more packages from the van as the shift goes on. (As it happens, this is the same task drones did in a 2017 pilot.)
PVDs also take leftover packages that don’t fit on UPS trucks from warehouses in some cases, according to a driver from California with 12 years at the company, including several weeks as a PVD.
Opinions about PVDs within UPS’ full-time staff vary. Some are happy to have the reinforcements, saying their routes have become more intense under Tomé, with more stops to complete in the same amount of time.
“I had a PVD who just saved my life every day. He was reliable. It was amazing to have him out there,” the Minnesota driver said.
Others are less enthused. “I have my route, and I have about 200-plus stops,” a 20-year-veteran UPS driver in the New York metro area said. “If I was to do it myself, that would definitely be a 12-hour day.” PVDs can be helpful, he said, but they’re not consistent. “My experience with the PVDs is, it’s kind of a joke,” he said.
Of the handful of PVDs assigned to him over the years, only one actually lightened his load, he said. “Not only are they screwing these people that they’re hiring, but they’re also hurting us – the people that have been there.”
Drivers are hurt because PVDs put a Band-Aid on the problem of running the system too lean, with too many deliveries per route, the New England driver said. Plus, they take opportunities that could go to part-time workers in the process of putting in their time with hopes of climbing the ladder within the company. “We could hire more people, we could make more routes. But they don’t want to pay,” he said. “Overtime is cheaper than a whole other route.”
The coming fight
Dissatisfied drivers will have their chance to push back against Tomé’s amplified use of PVDs in 2023, when the company and the Teamsters negotiate a fresh contract. There are already Facebook groups dedicated to what Teamsters want to change, which should come as no surprise given that the majority of the union actually voted against the 2018 contract that set the status quo. (They fell short of the two-thirds needed to send it back to the negotiating table.)
Meanwhile, Teamsters have multiple grievances in the arbitration process at the national level related to PVDs, a union spokesperson told Insider via email. The spokesperson declined to detail the nature of those grievances, but it’s evidence the union is dissatisfied with how UPS is interpreting the peak and seasonal allowances in the contract. And some drivers say they’re dissatisfied with what union representatives have allowed.
Come 2023, Teamster negotiators will encounter a fresh face in Tomé, whose executive position at Home Depot didn’t involve any unionized labor, one analyst pointed out on a February earnings call.
When asked how she plans to manage UPS’ relationship with the Teamsters in February, Tomé said: “We think about a mutually beneficial outcome for both our Teamsters and UPS as we prepare for that contract. Reviewing labor is a strategic imperative. We want to keep those jobs. We want to grow jobs. So we’re going to be speaking with the union representation about how we do that going forward.”
UPS is an important bastion of the Teamsters’ might – the largest workforce the union represents. The UPS contract is the largest collective-bargaining agreement in North America, according to the union. And UPS union members are more likely to blame the union over the company for multiple controversial new positions created in recent years, based on interviews with drivers and comments on UPS driver forums.
The New England driver described the PVD question as a pivotal moment in the relationship between UPS drivers and their union. Drivers say the success of the next negotiation will all come down to who’s at the table to fight their side – and the campaign running up to the November election has already begun.
UPS’ crucial peak season, when PVDs are set to return, will be well underway by then.
“I hope not to see the PVDs again. … This company has been around so long. We can deal with the high volume. We can hire more people,” the New England driver said. “The PVDs weakened the union. Almost as if that’s what UPS wants.”