Like Lazarus arisen from the dead, the one-time corpse known as YRC Worldwide Inc. was out in force at last month's NASSTRAC annual meeting in Orlando, Fla. The less-than-truckload (LTL) carrier's exhibition booth was abuzz with activity, with CEO James L. Welch smiling and glad-handing shippers and third-party logistics service providers.
About 1,100 miles away in Fort Smith, Ark., Judy R. McReynolds, CEO of Arkansas Best Corp., the parent of YRC rival ABF Freight System Inc., had other things on her mind. Her company is locked in what has become a near life-and-death struggle with the Teamsters union to reach agreement on a new contract that calls for wage and pension cuts, as well as higher health care payments for workers. Without a satisfactory deal, ABF has warned that it would have to scale back its network, shutter terminals, and, invariably, lay off workers.
That's not to say ABF wasn't a presence at NASSTRAC. In fact, for the third time in four years, the shipper group named ABF its national LTL "Carrier of the Year," a testament to ABF's long-held and mostly undisputed reputation for service excellence.
But for a publicly traded concern like ABF, awards, while certainly appreciated, pale in importance at this point to the $230 million in cumulative losses suffered since 2009. ABF says much of the problem would disappear if its workers, who are the best paid in the LTL industry, would accept modest wage cuts and benefit concessions that would still leave them with higher salaries than YRC, and certainly higher than the nonunion entities that have come to dominate LTL.
So far, it hasn't gone well. Teamster leaders representing 7,500 ABF workers were not happy with the company's late April proposal, under which employees would take a 6.5-percent across-the-board wage cut, accept reductions in ABF's pension contributions as well as caps on those contributions, and pay about $3,000 a year for family health coverage, which is more than labor is accustomed to paying. "We've put millions of dollars worth of operational relief on the table, but that apparently is not enough," said Gordon Sweeton, co-chairman of the Teamsters ABF National Negotiating Committee, in a statement April 19.
Still, both sides agreed to extend the current contract, which expired on March 31, until the end of May in order to continue talking. This marks the second consecutive monthly extension and could be the first of many.
By contrast to the situation with ABF, the Teamsters appear to be playing well with other companies in the sandbox. At press time, the union looked to be on track to clinch a new contract with UPS Inc. and its UPS Freight LTL subsidiary by the beginning of May, which would be roughly three months before both pacts expire. And Teamster leaders agreed in late April to a restructuring at YRC Freight that allows YRC's long-haul unit to close three breakbulk terminals and consolidate 29 "end-of-line" terminals used as freight pickup and final delivery points. The change is expected to save YRC Freight up to $30 million a year by improving line-haul density, cutting building and leasing expenses, and reducing freight "touches" that often prolong transit times, raise labor costs, and increase damage claims.
It should be noted that ABF and the Teamsters bring baggage to the table that other companies don't have. In 2010, ABF and Teamster leaders agreed to wage and benefit concessions to roughly match three extraordinary givebacks agreed to by YRC's Teamster workers to keep the carrier alive at the time. However, ABF's rank and file spurned the proposal.
Then in a move ABF may live to regret, it sued YRC and the Teamsters in an effort to void those agreements on grounds they were negotiated outside of the broad labor compact that covers the trucking industry. Despite several legal setbacks, ABF insists on pursuing the suit, an approach that can't sit well with the Teamster hierarchy. After all, having a three-year lawsuit hanging over one's head might not provide a strong incentive to bargain with the party that brought it.