Potential UPS And Teamster Deal Bails Out Cigar Industry
The handmade cigar industry seems to have narrowly avoided the loss of its biggest and most essential logistics provider as UPS and the International Brotherhood of Teamsters reached a tentative labor deal yesterday to potentially avoid a strike involving 340,000 full- and part-time UPS workers. With a contract set to expire on Monday, July 31, the Teamsters had promised to strike if a new deal was not reached. While both sides now feel confident that the issues are resolved, the new agreement still faces a ratification vote by workers.
UPS is key to the cigar industry. “We don’t have a concrete percentage, but by far the majority of cigars that are shipped in the United States are sent via UPS since Fed-Ex doesn’t allow tobacco/cigar shipments,” says Joshua Habursky, deputy executive director/head of government affairs for the Premium Cigar Association (PCA).
“We only have two choices: U.S. Mail and UPS,” says Jeff Borysiewicz, owner of Corona Cigar Co., a major cigar retailer with several locations throughout Florida.
If you buy cigars online, you likely get your cigars via UPS. Even if you only buy via brick-and-mortar cigar shops, UPS probably is involved, as cigar distributors use the shipper to get their product to retailers.
Last Friday, the PCA partnered with more than 200 organizations in signing a letter designated for the White House, emphasizing the drastic importance for the two parties to reach an agreement. Scott Pearce, executive director of the PCA, also sent a personal letter to the White House outlining the threat a strike would pose to the small-business-heavy, premium cigar industry.
“Our industry relies heavily on efficient logistics and timely deliveries, and any disruption in UPS services would be felt severely by our member businesses and customers,” wrote Pearce in his letter.
While it looks like a strike will be avoided, the near holdout presented legitimate cause for concern to the cigar industry. On the wholesale side of the business, the prospect of a strike had suppliers and retailers putting contingency plans in place to manage their large volume of shipments. Corona Cigar intends to move to the U.S. Post Office in case of a strike. “If we do have to switch to U.S. Mail, instead of [customers] getting their packages in two to three days, it might take five days or even a week. They will still get their cigars,” says Jeff Borysiewicz.
JR Cigars, one of the biggest sellers of cigars in the world, also has plans to use the Post Office and other carriers as a plan B. “In the event UPS strikes on August 1st, 2023, JR Cigars Distribution Center in Burlington, NC will continue shipping to customers in a timely manner,” says Davide Moro, chief executive officer at JR Cigar. He said the company’s contingency plan “includes a secondary pick up at the facility where it is needed to ensure orders are leaving daily, with little to no impact on our customers. We are monitoring the situation very closely and remain confident to serve our customers as always,” continues Moro.
The Teamsters have said that they want a new contract that “guarantees better pay for all workers, eliminates a two-tier wage system, increases full-time jobs, resolves safety and health concerns and provides stronger protections against managerial harassment.” Recently, Teamsters president Sean O’Brien said in an interview with MSNBC that “95 percent of the contract, noneconomic issues, are done.” As both parties agreed to re-join the negotiating table yesterday, it seems the final economic hurdles were overcome.
UPS and the Teamsters have reached the breaking point before. The last strike was in 1997, a 15-day holdout that created some strain on companies and consumers in the cigar industry.“ It never really amounted to much. They figured it out,” says Borysiewicz. Back then, the cigar industry had Fed-Ex as an option, e-commerce wasn’t nearly as prevalent as it is now and the cigar industry was at the end of a boom, rather than in the heat of it, as it appears to be now.
The ratification vote via UPS workers is set to begin August 3 and conclude August 22.
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