ABF Freight System, the seventh-largest less-than-truckload (LTL) carrier by revenue, said today that it has made inroads on its hotly-contested contract with the International Brotherhood of Teamsters that was scheduled to expire on March 31, which has led to a 30-day extension for the National Master Freight Agreement.

ABF officials said negotiations are scheduled to resume the week of April 8 and that service to shippers remains business as usual.

“We thank all of our employees and customers for their patience and commitment to ABF during this important process,” ABF said in a statement.

And Teamsters for a Democratic Union, the dissident wing of the 1.4 million member union, said in an online note to its members said that bargaining continues “with the company in the driver’s seat, focusing on concessions being demanded by management on operations, unbalanced freight lanes, and more,” adding that supplemental bargaining has proceeded also.

“Bargaining on economics (wages, pensions, health and welfare) has apparently not taken center stage yet,” TDU said in a statement.

TDU added that in a conference call with local union leaders today, IBT International vice president Gordon Sweeton and IBT staffers stated that the company needs relief and that another call will be held in two weeks to update local officers on the negotiations.

In December, union locals representing 7,500 drivers, dockworkers, mechanics, and clerical staffers at ABF asked the seventh-largest LTL carrier for a two-year contract with healthy wage and benefit increases.

As previously reported, Teamsters locals are asking ABF for $1-per hour wage increases and additional contributions to their pension, health and benefit package.

The company has already asked that it negotiate separately from chief union rival YRC Worldwide, which has been revived financially under new President and CEO James Welch.

And if the company were to agree with a two-year contract, that would mean the next contract would expire in 2015—when YRC’s contract covering some 20,000 Teamsters also expires.

After breaking away from chief rival YRC Worldwide in an attempt to negotiate separately with the Teamsters National Freight Industry Negotiating Committee (TNFINC), ABF made an initial contract offer that the union says insulted ABF’s 7,500 drivers, dockworkers, mechanics and clerical staff.

The Teamsters immediately responded with a press release that called that initial offer insulting and a “non-starter.”
 
A second round of negotiations in Kansas City starting Jan. 7 did not fare much better, according to the head of the Teamsters freight negotiating committee.
 
“ABF’s initial contract proposals ... seek to destroy the NMFA standards that have been in effect for decades and served ABF well,” Gordon Sweeton, co-chairman of the Teamsters negotiating committee said in a press release.  “We hope the company will bargain in a traditional manner so that we can make progress on the important issues from the start.”
 
Among the initial demands by the nation’s sixth-largest LTL carrier, ABF wanted to eliminate all supplemental agreements to the basic contract; reduce paid time off; eliminate the longstanding grievance procedures that have been in effect for more than half a century; expand use of nonunion subcontractors, expand use of worker surveillance; and create new, lower-paying part-time positions in most job classifications.
 
ABF has responded with details of its current financial plight. Its stock price has plummeted by more than 80 percent in the past two years to trading around $9 a share at press time. It says its high labor costs are responsible for more than $230 million in losses since 2009.
 
ABF says its goal is to secure a new contract that allows ABF to “substantially lower its costs, become more flexible and better compete in a rapidly changing marketplace” that has seen hundreds of union carriers go out of business and non-union carriers proliferate.
 
In a press release describing its negotiating goals in general terms, ABF says it is negotiating its own national contract to create “an unprecedented opportunity” for both parties to work together and fix the labor cost problems that have led to its current financial plight.
 
In its statement, ABF says was “disappointed” to see a public update distributed by the Teamsters prior to the start of its contract talks stating that “management labor costs” are excessive, and that an economy growing at 4 percent annually would somehow fix ABF’s problems.
 
“Neither of these statements is correct, and it is important to clarify misconceptions and focus on what ABF really needs to compete,” the company said in its statement.
 
As for executive compensation, the company says that parent Arkansas Best Corp. CEO Judy McReynolds’ salary and incentive was 58 percent of the average of the other similar industry companies’ CEOs in 2011. In other words, ABF says she was paid about 40 percent less than her peers. In addition, all of the compensation of ABF officers including Ms. McReynolds adds up to less 0.5 percent of ABF’s costs, according to the company.
 
ABF claims chief rival YRC paid its former CEO Bill Zollars $2.5 million in total compensation for just five months in 2011 before he left the company.  That’s nearly twice what Arkansas Best’s CEO was paid for the entire twelve months of 2011, ABF says.
 
In contrast, ABF says its Teamster employees enjoy the highest levels of pay relative to all of their peers in the LTL industry in total compensation including wages, health and welfare, and pension. Last year alone, ABF paid $244 million in just union pension, health & welfare. More than half of that huge amount, $132 million went to union pension expense alone.
 
Further complicating matters are two extraneous factors that privately are infuriating the Teamsters:
-The union is currently the subject of a lawsuit by ABF over the 15 percent wage givebacks that the union rank-and –file approved to keep financially ailing YRC Worldwide, its chief competitor, alive; and
-Last June’s purchase by ABF parent Arkansas Best Corp. of Panther Expedited, a non-union expedited carrier specializing in same-day shipments, for $150 million
ABF, the largest unit of parent Arkansas Best Corp., has suffered financially during the Great Recession and its aftermath. Its stock has lost more than 75 percent of its value and was trading as low as $8 per share recently. It is close to $12 per share at press time.
 
Arkansas Best posted a net loss of $7.9 million in the fourth quarter compared to net income of $1.4 million during the fourth quarter of 2011. For all of 2012, ABF had a net loss of $7.7 million compared to net income of $6.2 million in 2011. Company officials have publicly cited its high cost structure when compared to chief non-union competitors such as Con-way and Old Dominion Freight Line.

“We are focused on a return to profitability at ABF by substantially lowering our costs in the next labor contract through negotiations that are now underway,” McReynolds said in a statement. “ABF’s management team is hopeful it will reach an agreement with the Teamsters that allows us to preserve good-paying jobs and protect our employees’ retirements through a lower cost structure that truly reflects the competitive nature of today’s LTL marketplace.”

ABF currently is suing the Teamsters over what it views as an unfair cost advantage that YRC currently has. YRC Teamsters earn about 15 percent less than ABF Teamsters, even though both companies are signatories to the National Master Freight Agreement.

March 28, 2013: ABF and the International Union have agreed to extend the contract until the end of April. The old contract terms will remain in effect.

Bargaining continues with the company in the driver’s seat, focusing on concessions being demanded by management on operations, unbalanced freight lanes, and more.  Supplemental bargaining has proceeded also.

Bargaining on economics (wages, pensions, health and welfare) has apparently not taken center stage yet.

In a conference call with local union leaders today, IBT International vice president Gordon Sweeton and IBT staffers stated that the company needs relief and that another call will be held in two weeks to update local officers on the negotiations.

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Despite receiving requests from a bipartisan group of seven lawmakers in transportation oversight roles, the Federal Motor Carrier Safety Administration will not delay the July 1 effective date of the latest changes to its hours-of-service rule, FMCSA Administrator Anne Ferro said here Friday.

Ferro reiterated the benefits she said FMCSA projected for the rule, telling reporters that delaying it would postpone those benefits.

“The hours-of-service rule has tangible safety benefits in reducing … cumulative fatigue,”  she said. “And it’s a very important rule to move forward on.”

The lawmakers, who lead the House Transportation and Infrastructure Committee and transportation appropriations committees in both chambers of Congress, asked that the rule be delayed until three months after the U.S. Court of Appeals for the District of Columbia Circuit decides its fate.

A federal appeals court heard arguments last Friday on the HOS regulation and has yet to rule, but Ferro warned that could be a long wait.

“Who here can really predict the timing of the court decision? That could be a full year plus lost on some important safety benefits,” Ferro said. “So July is the effective date.”

YRC Worldwide Inc. released a Securities and Exchange Commission proxy statement Wednesday inviting shareholders to its annual meeting.

The meeting, which will be April 30 at the less-than-truckload carrier's (Nasdaq: YRCW) headquarters in Overland Park, will discuss corporate matters and invite shareholders to vote on the company's directors, executive compensation and the appointment of accounting firm KPMG LLP as the company’s independent registered public accounting firm in 2013, the release said. The company recommends approval of KPMG.

The seven current members of the company’s board who were not appointed by the International Brotherhood of Teamsters as part of restructuring are running to retain the position through 2014. The company recommends its shareholders approve all seven.

The second proposal, a nonbinding vote to approve the compensation packages for the company’s core executive leadership, revealed how much each executive made in 2011 and 2012.

Here’s the total amount of salary, stock awards, incentives and bonuses awarded to YRC executives:

James Welch, CEO, YRC Worldwide

• 2011 - $3,484,385

• 2012 - $1,554,756

Jamie Pierson, executive vice president and CFO, YRC Worldwide

• 2011 - $1,556,841

• 2012 - $1,439,953

Michelle Russell, executive vice president and general counsel, YRC Worldwide

• 2012 - $1,393,744

Jeff Rogers, president, YRC Freight, a subsidiary of YRC Worldwide

• 2011 - $495,239

• 2012 - $1,798,214

Thomas O’Connor, president, Reddaway, a subsidiary of YRC Worldwide

• 2012 - $ 770,656

March 15, 2013: As Teamster Voice goes to press in mid-March, the International Union has informed local unions that YRC's proposed change of operations is being reviewed for substantive and procedural issues, and no hearing on it is set for March or April.

There are good reasons for a serious review. First, the sheer size of the change, with over 1,200 Teamster jobs being moved, and 230 being lost altogether. Second, the specifics of locations. And third, the way the seniority pool is overly apportioned, which assures the company that fewer slots will fill (meaning less moving pay and more workers out the door).

We encourage all YRC Teamsters to take a look and voice your opinions. The full change is posted here, and updates will be posted as available.

March 14, 2013: ABF Teamsters across much of the country have already given a $1.40 concession, well in advance of the contract. So when management comes to you asking for a wage giveback, you can tell them "I already gave up $1.40 per hour. And I didn't even get a vote on it!"

It was a secret deal, signed by Gordon Sweeton for the IBT and Trucking Management Inc (TMI) rep Robert Jones.  (Doesn't ABF claim that TMI does not represent them?)

Members were never informed. Members were never given a vote, in direct violation of the Teamster Constitution, Article 12, Section 2(b), which requires a secret ballot vote for any change in the contract terms.

How Did it Happen?

On August 1, 2011, ABF was required to increase its benefit contributions by $1 per hour, with the $1 to be allocated between the Central States Pension Fund and the Central States Health and Welfare Fund, for Teamsters in the South, the Carolinas, and most of the Central Region. The clear language is contained in each supplement.

Gordon Sweeton secretly signed most of the $1 away.

Then the same thing happened on August 1, 2012. Sweeton again signed away the members' money, on behalf of the Hoffa administration. So the pension payments of $342 per week have been frozen for nearly three years.

Net result: The H&W fund got a total of 60¢ per hour increase for 2011 and 2012 and the pension fund (which is in critical need of funding) got zero.

ABF Teamsters under the Central States Fund took a $1.40 concession. Without a vote.  This would be a 6% wage cut, if it had come out of our wages.

That $1.40 would provide $2,800 per year (at 2,000 hours per year) additional money into the pension fund for each employee, and boost every employee's pension by $28 (by the 1 percent accrual rule) per year of service. So ABF Teamsters have lost hundreds of dollars per month, thousands per year, off their future pension as a result of the secret deal.

A similar thing happened to ABF Teamsters in the Western Conference regarding the August 1, 2012 pension payment given back to an "escrow account."

When the company – or Hoffa and Sweeton – tells you to sacrifice, be sure to remind them that you already did!

YRC Freight, the long-haul unit of less-than-truckload carrier YRC Worldwide Inc., on March 11 unveiled a long-awaited network restructuring that seeks to close three breakbulk terminals and consolidate 29 smaller, "end-of-line" terminals used as freight pickup and final delivery points. However, it may be some time before the plan is implemented.

The Overland Park, Kan.-based carrier, which employs between 20,000 and 25,000 members of the Teamsters union, initially requested meetings on March 20 with leaders of union locals to discuss the proposed changes. However, the dissident group Teamsters for a Democratic Union (TDU) said today that the international leadership in Washington told all locals not to schedule any meetings with YRC through the end of April because there are "substantive and procedure issues" with the proposal.

YRC asked for the March 20 meetings in a Feb. 11 letter sent to Teamsters General President James P. Hoffa and other members of the union hierarchy.

Under the National Master Freight Agreement, the compact that currently governs labor relations between the Teamsters and what's left of the unionized trucking business, a company has the right to implement a "change of operations." Management must meet with the union to discuss the proposal, and labor has substantial input in how the change is executed. However, the Teamsters don't have much control over the company's overall strategy.

The proposed restructuring would eliminate breakbulk terminals in Cincinnati, St. Louis, and Memphis. It would also consolidate end-of-line terminals in San Jose, Calif.; Youngstown and Mansfield, Ohio; and Daytona Beach, Fla., among other cities, into YRC's terminal network. Ironically, on that list is Fort Smith, Ark., home of YRC's archrival, ABF Freight System Inc.

YRC Freight plans to open a small "relay" driver facility in Staunton, Va., staffed by 26 drivers. Relay drivers take over a load and drive between eight and 10 hours before handing that load to another driver. After a required break, the initial driver would then take over the next truck heading back to his or her hometown.

The restructuring proposal would lead to the loss of 760 dock, shop, office, and cartage jobs, and an additional 452 over-the-road driver positions at the various affected terminal locations. At the same time, 343 over-the-road driver jobs would be created, along with 639 cartage positions. All told, the restructuring would result in a net loss of 230 jobs.

In the Feb. 11 letter, YRC Freight said the proposal is designed to improve line-haul density, reduce unproductive "empty" miles, cut fixed administrative costs such as building and leasing expenses, and make the company's service more cost-effective.

FEWER "FINGERPRINTS"
A breakbulk facility acts as an intermediate sorting point for interregional freight. Freight from the various end-of-line terminals is sent to a regional breakbulk terminal to be combined into trailers, which the carrier then routes to end-of-line terminals. For example, freight destined for Texas from a terminal in Binghamton, N.Y., might go to a breakbulk terminal in Pittsburgh, where it would be combined with Texas-bound freight from other Eastern cities.

Charles W. Clowdis Jr., a longtime trucking executive and now managing director, transportation advisory services for the consulting firm IHS Global Insight, said the proposal should reduce the frequency of freight "touches" between origin and destination, a problem that plagued Yellow Transportation Inc., the LTL carrier whose 2003 merger with Roadway Express Inc. created what is now known as YRC Freight.

"Every time a carrier handles, or 'fingerprints,' a shipment, it adds labor costs," Clowdis said. In addition, fewer handoffs should, in theory, result in smaller loss and damage claims, he added.

"The basic premise is that fewer handling(s) and fewer small terminal investments translate into more profit," Clowdis said.

Freight-claims ratios, which historically were a big problem at YRC Freight, have declined for seven straight months on a year-over-year basis through the end of January, Jeff Rogers, YRC Freight's president, said in an interview with DC Velocity last month. Without disclosing specifics, Rogers said the unit's freight-claims ratio is at its lowest level in years.

The network proposal is Rogers' latest move to wring efficiencies and profitability out of YRC Freight. That unit still accounts for the bulk of the parent's revenue, and its troubles nearly drove the entire company into bankruptcy at the end of 2009. Rogers was named head of YRC Freight in September 2011 after three years piloting Holland, a regional carrier and YRC subsidiary.

YRC Freight posted fourth-quarter operating income of $21.1 million, its second consecutive quarter of operating gains and a nearly $48 million improvement over the 2011 period. Its fourth-quarter operating ratio—the ratio of revenues to expenses and a key gauge of a carrier's efficiency—improved 600 basis points year-over-year to 97.3, the unit's best fourth-quarter operating ratio in six years. The ratio meant YRC Freight generated $97.30 in expenses in the quarter for every $100 in revenues.

In a sign that YRC Freight has made progress in shedding unprofitable freight, the unit's revenue per hundredweight—a central measure of tonnage profitability—rose 3.2 percent both in the fourth quarter and for the entire year, even though tonnage and shipment count were down in the same periods.

UPDATED March 28, 2013: A hearing on YRC's proposed mega change of operations will be held April 19 in Dallas.

The International union announced two weeks ago that they were holding off a hearing to review the proposal due to substantive and procedure issues with the change. Now, the IBT has allowed the proposed change to be heard.

The proposed change document is available here.

The International union today informed local unions via a faxed memo that there are substantive and procedure issues with the change to be reviewed, and directed locals not to schedule meetings with the company regarding the change.

Three breakbulks are proposed for elimination: Cincinnati, St. Louis, and Memphis. It may be worth noting that all three of these local unions voted heavily against Hoffa in the 2011 IBT election.

29 end-of-line terminals are slated for closure: Youngstown Ohio, Mansfield Ohio, Wausau Wisc, Coldwater Mich, Libertyville Ill, St. Cloud Minn, Crystal Lake, Ill, Great Bend Kan, Lafayette Ind, Salem Ill, Bridgeport Neb, Grand Forks, ND, Carlstadt NJ, Elizabeth NJ, Wytheville Va, Springfield Ma, Littleton, NH, Lawrenceville Ga, Daytona Beach Fla, Hattiesburg Miss, Pensacola Fla, Victoria Tex, Fort Smith Ark, Greenville Miss, Bozeman Mont, Kalispell Mont, Benicia Calif, San Jose Calif, Bell Calif.

A small relay is proposed to open in Staunton Va, with 26 road drivers to be added there. And additional sleeper team drivers are to be based in Jackson Miss.

Many end-of-line terminals will lose a small number of road drivers, continuing the industry trend of ending such domiciles.

Management's proposal calls for a loss of 760 dock, cartage, shop, and office jobs, and a loss of 452 road jobs at the losing terminals. The gains would be 639 in cartage and 343 road, for a net loss of 230 jobs.

The goals are to increase the number of bills handled per terminal and reduce system miles.

The proposal can be downloaded here.

Stay informed and stand up for change in our union. Join TDU today.

The Teamsters union said late Friday it has made modest progress in contract talks with less-than-truckload (LTL) carrier ABF Freight Systems but cautioned the company "needs to get realistic" on the core issues, especially with less than a month to go before the current contract expires.

During scheduled negotiations last week in Kansas City, ABF withdrew its initial proposal and agreed to bargain from the existing contract, the union said in a statement Friday. Neither side would divulge the specifics of the carrier's original proposal. In a mid-January statement, the Teamsters said ABF sought increased use of part-timers and subcontractors and demanded reduced vacations and less time off for holidays, among other things.

Talks will resume next week. The contract covers about 7,500 ABF workers.

Gordon Sweeton, who heads the union's freight division and is lead negotiator in the talks, called ABF's move to bargain from language in the current pact a "step in the right direction." However, Sweeton said that with the contract expiring March 31, more work needs to be done to resolve the main differences between the two sides. He did not elaborate.

Fort Smith, Ark.-based ABF, a unit of Arkansas Best Corp., has, for the most part, kept mum during the negotiating process. In late December, however, the company went public with a warning that it would need to make "extensive changes" to its network if it couldn't lower costs and increase flexibility through a new labor agreement with the Teamsters union. Those changes could include shutting a number of terminals and distribution centers, ABF said. As of mid-2012, the carrier operated 265 terminals nationwide.

ABF has lost approximately $230 million since 2009. Part of the red ink stems from the impact of the recession and the destructive rate wars that ensued among LTL carriers in a failed effort to drive the struggling YRC Worldwide Inc., then the nation's leading LTL carrier, out of business. Part of it also stems from not only having the LTL industry's highest-paid workers but also lacking the network density needed to support a high-cost infrastructure.

Satish Jindel, founder and president of SJ Consulting, said in a letter to DC VELOCITY that ABF's inefficient terminal network is a key factor behind its problems. ABF handles 70 shipments per terminal each day. In comparison, rivals Con-way Freight, the LTL division of Con-way Inc., handles 270; FedEx Freight, FedEx Corp.'s LTL unit, handles 220; and Old Dominion Freight Line Inc. handles 130, according to Jindel.

Jindel, who has been critical of ABF's operational structure, said the company has been slow to react to changes in its customers' shipping patterns. Since 2007, ABF has closed less than 5 percent of its locations but has seen a 12-percent drop in volumes. In contrast, Con-way shuttered 17 percent of its terminals over that time, while FedEx Freight closed about 100 terminals.

In addition, ABF's fourth-quarter daily shipment count dropped 2.5 percent year-over-year, while UPS Freight, UPS Inc.'s LTL arm, and FedEx Freight posted gains, according to Jindel.

ABF is considered one of the best freight-handling companies in transportation. It is often used by businesses to ship hard-to-handle freight that other truckers won't touch. In fact, ABF is vocal about its skill in that area. It generates $374 in revenue per shipment, higher than any LTL carrier.

However, those shipments are very time- and labor-intensive to transport and don't generate the network velocity and density the company needs to support its operations, Jindel said.

In the letter, the consultant questioned why the Teamsters should give concessions to a company that "operates an inefficient network, lacks density, and has failed to increase sales when competitors have made significant progress in all those areas over [the] last few years."

The Federal Motor Carrier Safety Administration said it will not delay enforcement of the latest changes to the hours-of-service rules for truck drivers, saying that American Trucking Associations did not demonstrate enough harm to the industry and law enforcement to merit such a delay.

“Mere uncertainty over the possible outcome of the litigation, which you recognize is a matter over which the parties differ, does not create likelihood that the industry or the enforcement community will suffer harm due to wasted training resources or confusion,” FMCSA wrote in a letter to ATA, which the agency provided to Transport Topics.

ATA had asked FMCSA in a Jan. 25 letter to hold off enforcing the rule until three months after ATA’s pending lawsuit is decided.

The federation, which is suing in federal court to have the rule overturned, said the industry and law enforcement would need months to train and prepare for the changes.

In a lawsuit filed in February 2012, ATA asked the Court of Appeals for the District of Columbia Circuit to overturn the changes, saying the agency overstated the role fatigue plays in truck crashes and that the new rule is too restrictive.

Oral arguments before the appeals court are scheduled for March 15.

David Osiecki, senior vice president of policy and regulatory affairs at ATA, said he was “disappointed” by FMCSA’s decision.

“FMCSA’s response means that carriers, shippers and FMCSA-funded state enforcement agencies will have to spend time and money on training and adapting systems to a rule whose final form will not be certain until the court issues its decision,” Osiecki said.

The Commercial Vehicle Safety Alliance also asked for the delay, and the Owner-Operator Independent Drivers Association agreed.

The changes, set to take effect July 1, restrict how drivers can use the optional 34-hour restart to reset their weekly driving limits of 60 hours in seven days, or 70 hours in eight days.

Drivers will be able to use the restart only once every seven days, and it must include two periods from 1 a.m. to 5 a.m.

Under the new regulation, drivers will also have to take a 30-minute break before driving more than eight hours continuously.

ATA has not yet asked the D.C. court to force FMCSA to delay the changes. Osiecki said the group is “currently considering our options” for court action.