Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
ABF Freight Systems, the less-than-truckload (LTL) unit of Arkansas Best Corp., and national leaders of the
Teamsters union late Friday reached a tentative five-year labor contract governing 7,500 unionized ABF workers.
However, ABF's efforts to bring its high labor costs in line with its rivals are far from over.
It is expected that within two weeks, leaders of the Teamster locals representing ABF workers will meet to
vote on endorsing the contract. Should the local chiefs approve, the contract would go before ABF's rank-and-file,
a scrappy group that in 2010 rejected a proposal calling for wage reductions and benefit cuts similar to those
granted in 2009-2010 by Teamsters employed at archrival YRC Worldwide.
The rank-and-file's decision spawned what has become a near three-year lawsuit filed by the company against
YRC and the Teamsters alleging the agreements were negotiated outside the national compact that governs trucking
labor relations. It has also been, in management view, a key factor behind Fort Smith, Ark.-based Arkansas Best's
cumulative losses of more than $230 million since 2009.
The Teamsters declined comment beyond a statement confirming a tentative five-year deal had been reached. ABF also
declined comment beyond its own prepared statement. In the statement, the company said it was "very pleased" that an
agreement was reached, adding the compact would "maintain the best-paying jobs in the freight industry" and allow
unionized workers to remain in its pension funds.
Arkansas Best, which has the highest labor costs in the LTL industry, has recently become increasingly vocal about the need for labor cost reductions in order to remain
competitive with YRC and with the nonunion carriers that have come to dominate the LTL space. Management raised the ante
last December when it warned it would need to make "extensive changes" to its network if it was unable to dramatically lower
its labor costs and increase its flexibility through a new labor contract. Those changes could include shutting terminals and
distribution centers, the company said at the time.
Charles W. Clowdis, a long-time trucking executive and current managing director of transportation advisory services
at the consulting firm IHS Global Insight, estimates that YRC's labor costs are about 35 percent below ABF's. Clowdis added
that YRC's current labor cost structure could even fall below that of some major nonunion carriers.
One of YRC's biggest cost savings has been in the pension contribution arena. In mid-2009, as the company was hurtling towards a bankruptcy filing, it struck a deal with the Teamsters to suspend pension contributions for 18 months. When the
contributions resumed at the start of 2011, they were only at one-quarter what they were prior to the 2009 deal. YRC is
scheduled to resume full contributions in 2015, at which time it will face a $5 billion liability, estimates David Ross,
transport analyst for Stifel, Nicolaus & Co., an investment firm.
Although virtually impossible to quantify, it is widely believed ABF's labor costs make it burdensome to gain or
keep business in the fiercely competitive LTL industry. ABF's parent, which generated about 80 percent of its overall
revenue from traditional LTL trucking in the first quarter, is attempting to diversify into largely nonunion areas. The
most notable of these efforts is the company's $180 million purchase of the nonunion expedited transportation company
Panther Expedited Services Inc. last June. The Panther unit contributed $53.2 million in revenue in the first quarter, according to
ABF's financial results released last week. However, the unit reported an $864,000 operating loss due to subpar customer
demand and high upfront investments in its business.
Coincidentally, the ABF-Teamster deal was announced the same day that YRC and its YRC Freight long-haul unit
reported first-quarter operating gains for the first time since 2007.
It also comes a little more than a week after UPS Inc. and Teamster leaders reached tentative five-year labor
contracts covering nearly 250,000 unionized employees at UPS and the company's LTL unit, UPS Freight. Those agreements
would cover about 240,000 Teamster members working in Atlanta-based UPS' small-package operations and another 10,000 to
12,000 union workers at UPS Freight. Combined, it represents the largest collective-bargaining agreement in North America.
Local union leaders for UPS are expected to meet tomorrow to review the tentative agreements.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.