Members of the International Brotherhood of Teamsters' ABF master negotiating committee Oct. 30 accepted ABF Freight System Inc.'s last proposal for the only unapproved supplement to the national master freight agreement after members covered by the Central Region Local Cartage Agreement voted not to authorize a strike, the union announced.

Approval of the last of 27 supplements paves the way for implementation of the master five-year agreement, which covers about 7,500 drivers, dockworkers, mechanics and clerical staff. The agreement, which provides a 7 percent wage reduction, takes effect Nov. 3 and expires March 31, 2018.

After the Central Regional Local Cartage Supplement, which covers nearly 1,900 drivers, dock workers and other employees throughout the Midwest, was twice rejected, IBT conducted a strike authorization vote among the members covered by the unapproved supplement. When the ballots were counted Oct. 29, about 70 percent of members who voted declined to authorize a strike, the union said. In such situations the IBT constitution allows the master negotiating committee to accept the company's final offer, the union said.

“We have now arrived at a point where, simply put, there is nothing left to negotiate with this employer and no desire for a strike in the Central Region, based on the vote we received [Oct. 29] from the affected membership,” Gordon Sweeton, a co-chairman of the Teamsters National Freight Industry Negotiating Committee, said in the union's statement. “The responsible course of action is to finalize the agreement.”

Agreement Contains 27 Riders

The Teamsters and ABF, based in Fort Smith, Ark., announced June 27 that a majority of IBT members covered by the national master freight agreement voted in favor of ratification.

ABF said in an Oct. 30 statement that 26 out of 27 area supplements were ratified by mid-October. But IBT procedures required that all of the supplemental agreements, or riders, be approved before the national master freight agreement could take effect.

The Central Region Local Cartage supplemental agreement covers about 1,900 drivers, dock workers and other employees in Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin and one terminal in West Virginia. Cartage workers generally transport goods on docks.

Ken Paff, co-founder and current national organizer of Teamsters for a Democratic Union, a union splinter group, told Bloomberg BNA Oct. 10 that Central Region Local Cartage members had rejected the contract twice because they wanted the union to bargain some more for them. At the time, he said, the international union decided to conduct a strike vote, “although [the Teamsters] have not presented to the members any issues they would be striking for. It appears they simply want to wrap this up.”

Judy R. McReynolds, the president and chief executive officer of Arkansas Best Corp., ABF Freight's parent company, said in the company's Oct. 30 statement that the new agreement “follows several years of sacrifice from our non-union employees.”

“As the transportation and logistics market continues to rapidly evolve,” she added, “we are grateful that our union employees have also recognized the need for ABF Freight to operate much more efficiently so that we can better serve our customers every day.”

Economic Relief for ABF

The master agreement contains a 7 percent wage reduction, but the Teamsters said “with incremental annual wage increases” the reduction will be recouped over the life of the agreement.

Under the new contract, new hires have a one-year-longer wage progression. Hourly and mileage rates will increase 2 percent on July 1 in 2014, 2015 and 2016.

On July 1, 2017, wages will increase 2.5 percent, raising rates above current levels.

A profit-sharing bonus of 1 percent of W-2 earnings will be issued in years when the operating ratio is 96 or below, 2 percent if 95 or below, and 3 percent if 93 and below.

The cost-of-living allowance will be modified by limiting an increase only to when inflation is in excess of 3.5 percent annually. The annual payment is capped at five cents per hour. According to IBT, the current COLA clause has paid just 10 cents over the past decade because inflation has been so moderate.

Another provision for direct economic relief for ABF is a reduction in paid leave. Beginning in 2014, employees will accrue paid vacation at a lower rate that will reduce annual paid vacation leave by one week.

Under the contract, cuts in wages and benefits will be equal both for employees with union representation and those without representation.

If ABF files for bankruptcy or is sold, the Teamsters national freight industry negotiating committee can terminate the wage reduction. The contract also stipulates that amounts the company saves through wage reductions will be applied to purchases of new freight equipment. No bargaining unit work can be transferred to other trucking companies unless the labor agreement authorizes it.

“The agreement does require the company to continue to participate in the same health, welfare and pension programs,” the union said, “and provides for contribution increases in order to maintain benefit levels retroactive to Aug. 1.”

ABF said in its Oct. 30 statement that wage reductions for employees covered by the contract would take effect during the week of Nov. 3. It also confirmed that increases to workers' health, welfare and pension benefits would be retroactive to Aug. 1, 2013.

IBT's Sweeton said, “We believe that this agreement helps protect our members' health, welfare and pension benefits and will also give the company the ability to compete in a very tough trucking environment, which is good for ABF and the long-term job security of our members.”

According to ABF, the ratified master agreement “achieves the company's stated goals of putting ABF Freight on a path to profitability by allowing the company to reduce costs and become more competitive, while preserving the best-paying jobs in the freight industry for ABF employees” represented by the Teamsters.

Company to Save $55 Million to $65 Million Annually

ABF officials estimated that the labor agreement would lead to an estimated net savings of between $55 million to $65 million on an annualized basis.

The company said the savings would be generated by “wage and vacation reductions and from work-rule and flexibility components of the contract.”

Roy Slagle, ABF's president and chief executive officer, described the new agreement as “a significant step for our company.”