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.
Leaders of local unions representing 7,500 workers at less-than-truckload (LTL) carrier ABF Freight System Inc.
today approved a tentative five-year labor agreement,
paving the way for a June vote by a rank and file whose decision could determine the future of ABF and parent Arkansas Best Corp.
In a statement released late today, the Teamsters union said leaders from about 160 locals unanimously endorsed
the contract, which was approved May 3 by members of the international union. The tentative agreement calls for a
7-percent wage cut, which the union said would be fully recouped by the contract's fifth year. The Teamsters said
they defeated attempts by the company to negotiate "major cuts" to health, welfare, and pension benefits.
"Nobody ever wants to see a pay cut, but in light of the company's struggles and our desire to see the company survive,
something needed to be done," said Gordon Sweeton, who headed the Teamster group negotiating the ABF contract, in the
statement. Sweeton said the members' top priority all along was protecting their benefits.
The union said that ballots would be mailed on or about June 3 to ABF's rank and file. The ballots will be counted
on or about June 27.
In 2010, ABF's
rank and file rejected a contract proposal that would have brought ABF's labor costs in line
with those of YRC, whose own Teamster workers had agreed to a 15-percent wage cut and an 18-month suspension of
pension contributions to keep the ailing carrier afloat. The rank and file's action defied Teamster leadership,
which had approved the deal with ABF.
ABF has said the tentative agreement would maintain its workers' status as the best paid in the LTL sector.
Arkansas Best and ABF have repeatedly said ABF's labor costs, the highest in the LTL business, must be reduced
for the carrier to stay competitive.
Today's action by the Teamster locals comes as Fort Smith, Ark.-based Arkansas Best told employees that failure
to ratify the agreement could pave the way for a purchase by rival YRC Worldwide Inc. and could spell a "very uncertain"
future for the company and its workers.
In a message aimed at the union workers, the company said that "if you vote yes and ratify the agreement ... then
ABF can continue on with our own plan to improve profitability, take back market share, [and] grow and protect your
jobs and retirement benefits."
By contrast, a contract rejection means the "likelihood that YRC would be able to consummate a deal grows higher," the document said.
The document said Arkansas Best, which has lost $265 million since 2009, is in a "weak position" to fend off YRC's potential
advances. No company executive or group of executives holds enough outstanding shares to thwart a takeover bid, with the board
and management combined owning only between 4.5 percent and 10 percent of the company's shares, according to the document.
Kathy Fieweger, an ABF spokeswoman, said the document was designed to help managers respond to employees' questions and
concerns about YRC's strategy, given that company's own financial difficulties over the past four to five years.
CEO MEETING
In late March, YRC CEO James L. Welch met with Arkansas Best President and CEO Judy McReynolds
to discuss the possibility of Overland Park, Kan.-based YRC's buying all of Arkansas Best,
which would include ABF and expedited transport firm Panther Expedited Services, among other assets.
On April 1, McReynolds told Welch a transaction was inappropriate at that time.
The companies have not talked since then. Welch, in a memo distributed late last week after news of the talks
and possible transaction was reported May 8 on DC Velocity's website, said discussions between the companies
are essentially over.
"The entire matter was opened and closed in 10 days, and that was it, end of story," Welch wrote.
A well-placed source said Teamster General President James P. Hoffa; Tyson Johnson, head of the union's freight division;
and Sweeton were unaware of YRC's buyout overtures until the end of April, long after the two CEOs had met. Teamster leaders
have surmised over the past month that Arkansas Best management would use the developments as leverage to convince the rank and
file to ratify the compact. The company might play on workers' fears that, without a collective bargaining agreement in place,
the rank and file would be co-opted under a less-generous YRC labor agreement if an acquisition occurred, according to the source.
The Teamsters represent about 25,000 YRC workers.
In trading today on the NASDAQ, Arkansas Best stock closed at $17.74 a share, up 36 cents a share on the day.
YRC stock closed at $22.06 a share, up $2.87 a share. The stock price is slightly below its 52-week high of $22.15 a share.
Based on revenue, the two companies combined controlled about 20 percent of the $32 billion LTL market in 2012, according to
data from SJ Consulting, a Pittsburgh-based consultancy.
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.