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.
The decisive rejection yesterday by YRC Worldwide Inc.'s unionized workers of the company's proposed five-year contract
extension was more than a referendum on the merits of the proposal. It was a referendum on the past four years.
Since 2009, the less-than-truckload (LTL) carrier's 26,000-member rank and file have agreed to multiple concessionary
agreements to keep their employer alive. The givebacks have resulted in reduced wages and vastly diminished pensions. For
workers who may have owned company stock before 2009, an agreement reached on New Year's Eve of that year to swap $530 million
in debt for $1 billion in new equity—while it kept the company out of bankruptcy—diluted the value of their holdings
to virtually nothing. What remained for the workers were their paychecks, their health insurance, and a pension that had been cut
by 75 percent.
Still, their wages were decent compared to what employees of non-union truckers took in. Health coverage was inexpensive and
generally considered excellent. Some pension was better than none. And in a still-shaky economy, they had jobs with some degree of
security.
That's what made yesterday's results so striking. Not only did the rank-and-file reject the proposed five-year contract
extension, but they did so by a 4,400-vote margin out of about 19,000 ballots counted. With YRC financially vulnerable, with
customers anxious over its fate, and with rivals expected to begin circling for profitable business, it's likely many workers
knew they could be putting their jobs on the line with their votes.
But for long-suffering YRC union employees, the line had finally been crossed. They had seen their company survive a near-death
experience, begin what appeared to be an ascendancy under new management, endure a botched network realignment at its largest unit
that led to the firing of the unit's CEO, and were shocked to hear that the company without their knowledge had offered to buy
most, if not all, of its largest union rival, Arkansas Best Corp., parent of ABF Freight System Inc.
According to several workers, the rank and file might have agreed to a straightforward extension of the current contract, which
runs until March 2015. Given all they have gone through, though, the demand for additional concessions accompanying the extension
proved to be too much to swallow, they said.
Stephen J. Walski, a Joliet, Ill.-based driver for YRC's Holland regional subsidiary, said workers might have ratified the
extension if it didn't call for more givebacks or if it was the first time YRC had ever sought concessions. With neither being
the case, the time had come to say no, he said.
"The majority of us love what we do, we take pride in it, and we work hard 12- to 14-hour days to service our customers, but
there comes a time when enough is enough," Walski, an 18-year veteran, said in an e-mail.
Walski said the company's proposal for workers to forego wage increases in the first two years in return for lump-sum bonuses,
combined with a continued 15-percent wage reduction that is in the current contract, would cost the typical worker thousands of
dollars by 2019. Those calculations include the impact of wage increases that start in the third year, he said.
Workers were upset with the company over language requiring them to be with the company for at least 11 years to qualify for
three-weeks vacation, for freezing the wages of non-driver union workers, and for requesting that up to 6 percent of driver work
be eligible for subcontracting, Walski said. They were particularly peeved that there was no proposed change in the company's
pension contributions, currently at one-fourth what they were prior to the round of concessions in 2009, he added.
LET DOWN BY LEADERSHIP
Workers also felt let down by Teamster leadership, claiming it never bargained with YRC for a better deal. Much of the
wrath was directed at Tyson Johnson, head of the union's freight division. Ken Paff, national organizer of the Teamsters
for a Democratic Union (TDU), a dissident group, said Johnson refused to negotiate with YRC because he knew members would
balk at any more concessions.
Paff said YRC workers were left to "fend for themselves" by the leadership's inaction, a scenario that marks one of the biggest
leadership failures in the 15-year tenure of General President James P. Hoffa.
A source close to the Teamster hierarchy said Johnson and others were in a no-win situation because YRC's lenders were
demanding concessions in return for restructuring $1.4 billion in company debt while the rank-and-file were in no mood for
further givebacks.
"[Johnson] could have negotiated a deal somewhat like this, sent it to the members, and they would have said, 'Why did you come
to us with this piece of s**t?'" said the source.
"The issue is the debt, and there is nothing we can do to change that," the source said. "Anything we're doing right now is on
the margins."
STATE OF SHOCK
The outcome of the vote stunned the company, which had been confident that the extension would be ratified. A research
firm hired by YRC to poll the rank and file concluded that most members favored ratification, according to a well-placed
union source.
YRC CEO James L. Welch had said that contract ratification was essential for the company's lenders to agree to restructure its
$1.4 billion debt package currently being carried at crushing double-digit interest rates. Without a contract extension in hand,
there would be no deal with the banks. No deal with the banks would scuttle management's best-laid financial plans, which include
cutting its debt by $300 million by issuing $250 million in new common stock and converting $50 million of debt for equity, as
well as an agreement to receive $1.15 billion in two five-year loans to help refinance its debt load at more attractive terms.
All of this, however, was contingent upon ratification of the contract extension, which Welch said would help YRC achieve about
$100 million in annualized cost savings.
Welch has vowed there will be no bankruptcy filing. But the implication was clear that labor held the key to the company's
fate, at least in the near term. No one can remember a trucker that has ever emerged from bankruptcy protection; virtually all
that go bankrupt go out of business.
In a statement this morning, Welch blamed the vote's outcome on the timing of the Dec. 23 announcement about the two loan
agreements. The news was made public after most Teamsters had mailed in their ballots, Welch said. As a result, they didn't have
the full facts needed to make an informed decision, he said. Welch declined further comment other than to say the company
continues to talk to all stakeholders.
At this point, time is not on anyone's side. The first principal payment on the debt, $69 million, is due Feb. 15. The company
is believed to have available resources to make that payment. But YRC has a $326 million payment scheduled for September 2014 and
another $678 million by March 2015. Then there's the 800-pound gorilla perched in the corner: $2 billion or more of unfunded
pension liabilities that, at some point, must be met.
Paff of TDU called on Hoffa to immediately begin simultaneous talks with YRC management and with its lenders, a strategy that
should have been followed all along instead of first working out financing deals and then hoping for a ratification vote. Parallel
discussions are the only way labor will have any leverage to save Teamster jobs without gutting the contract, Paff said.
In 2009, Hoffa's backing and orchestrating of the debt-for-equity swap were instrumental in saving YRC. Now, As Hoffa almost assuredly steps into the YRC fray again, he might be reminded of an auspicious milestone next week. On Jan. 15, 1964, his father, James R. Hoffa, signed the first National Master Freight Agreement covering more than 400,000 workers in the
freight industry. The agreement, which brought workers under a collective umbrella for the first time, was the senior Hoffa's
crowning achievement and represented Teamster power—and freight influence—at its zenith.
Today, after three decades of mergers, bankruptcies, and the encroachment of non-union carriers that has decimated the
Teamster freight division, his son will go to work to rescue the largest survivor of the once-mighty fiefdom.
Generative AI (GenAI) is being deployed by 72% of supply chain organizations, but most are experiencing just middling results for productivity and ROI, according to a survey by Gartner, Inc.
That’s because productivity gains from the use of GenAI for individual, desk-based workers are not translating to greater team-level productivity. Additionally, the deployment of GenAI tools is increasing anxiety among many employees, providing a dampening effect on their productivity, Gartner found.
To solve those problems, chief supply chain officers (CSCOs) deploying GenAI need to shift from a sole focus on efficiency to a strategy that incorporates full organizational productivity. This strategy must better incorporate frontline workers, assuage growing employee anxieties from the use of GenAI tools, and focus on use-cases that promote creativity and innovation, rather than only on saving time.
"Early GenAI deployments within supply chain reveal a productivity paradox," Sam Berndt, Senior Director in Gartner’s Supply Chain practice, said in the report. "While its use has enhanced individual productivity for desk-based roles, these gains are not cascading through the rest of the function and are actually making the overall working environment worse for many employees. CSCOs need to retool their deployment strategies to address these negative outcomes.”
As part of the research, Gartner surveyed 265 global respondents in August 2024 to assess the impact of GenAI in supply chain organizations. In addition to the survey, Gartner conducted 75 qualitative interviews with supply chain leaders to gain deeper insights into the deployment and impact of GenAI on productivity, ROI, and employee experience, focusing on both desk-based and frontline workers.
Gartner’s data showed an increase in productivity from GenAI for desk-based workers, with GenAI tools saving 4.11 hours of time weekly for these employees. The time saved also correlated to increased output and higher quality work. However, these gains decreased when assessing team-level productivity. The amount of time saved declined to 1.5 hours per team member weekly, and there was no correlation to either improved output or higher quality of work.
Additional negative organizational impacts of GenAI deployments include:
Frontline workers have failed to make similar productivity gains as their desk-based counterparts, despite recording a similar amount of time savings from the use of GenAI tools.
Employees report higher levels of anxiety as they are exposed to a growing number of GenAI tools at work, with the average supply chain employee now utilizing 3.6 GenAI tools on average.
Higher anxiety among employees correlates to lower levels of overall productivity.
“In their pursuit of efficiency and time savings, CSCOs may be inadvertently creating a productivity ‘doom loop,’ whereby they continuously pilot new GenAI tools, increasing employee anxiety, which leads to lower levels of productivity,” said Berndt. “Rather than introducing even more GenAI tools into the work environment, CSCOs need to reexamine their overall strategy.”
According to Gartner, three ways to better boost organizational productivity through GenAI are: find creativity-based GenAI use cases to unlock benefits beyond mere time savings; train employees how to make use of the time they are saving from the use GenAI tools; and shift the focus from measuring automation to measuring innovation.
According to Arvato, it made the move in order to better serve the U.S. e-commerce sector, which has experienced high growth rates in recent years and is expected to grow year-on-year by 5% within the next five years.
The two acquisitions follow Arvato’s purchase three months ago of ATC Computer Transport & Logistics, an Irish firm that specializes in high-security transport and technical services in the data center industry. Following the latest deals, Arvato will have a total U.S. network of 16 warehouses with about seven million square feet of space.
Terms of the deal were not disclosed.
Carbel is a Florida-based 3PL with a strong focus on fashion and retail. It offers custom warehousing, distribution, storage, and transportation services, operating out of six facilities in the U.S., with a footprint of 1.6 million square feet of warehouse space in Florida (2), Pennsylvania (2), California, and New York.
Florida-based United Customs Services offers import and export solutions, specializing in remote location filing across the U.S., customs clearance, and trade compliance. CTPAT-certified since 2007, United Customs Services says it is known for simplifying global trade processes that help streamline operations for clients in international markets.
“With deep expertise in retail and apparel logistics services, Carbel and United Customs Services are the perfect partners to strengthen our ability to provide even more tailored solutions to our clients. Our combined knowledge and our joint commitment to excellence will drive our growth within the US and open new opportunities,” Arvato CEO Frank Schirrmeister said in a release.
And many of them will have a budget to do it, since 51% of supply chain professionals with existing innovation budgets saw an increase earmarked for 2025, suggesting an even greater emphasis on investing in new technologies to meet rising demand, Kenco said in its “2025 Supply Chain Innovation” survey.
One of the biggest targets for innovation spending will artificial intelligence, as supply chain leaders look to use AI to automate time-consuming tasks. The survey showed that 41% are making AI a key part of their innovation strategy, with a third already leveraging it for data visibility, 29% for quality control, and 26% for labor optimization.
Still, lingering concerns around how to effectively and securely implement AI are leading some companies to sidestep the technology altogether. More than a third – 35% – said they’re largely prevented from using AI because of company policy, leaving an opportunity to streamline operations on the table.
“Avoiding AI entirely is no longer an option. Implementing it strategically can give supply chain-focused companies a serious competitive advantage,” Kristi Montgomery, Vice President, Innovation, Research & Development at Kenco, said in a release. “Now’s the time for organizations to explore and experiment with the tech, especially for automating data-heavy operations such as demand planning, shipping, and receiving to optimize your operations and unlock true efficiency.”
Among the survey’s other top findings:
there was essentially three-way tie for which physical automation tools professionals are looking to adopt in the coming year: robotics (43%), sensors and automatic identification (40%), and 3D printing (40%).
professionals tend to select a proven developer for providing supply chain innovation, but many also pick start-ups. Forty-five percent said they work with a mix of new and established developers, compared to 39% who work with established technologies only.
there’s room to grow in partnering with 3PLs for innovation: only 13% said their 3PL identified a need for innovation, and just 8% partnered with a 3PL to bring a technology to life.
Volvo Autonomous Solutions will form a strategic partnership with autonomous driving technology and generative AI provider Waabi to jointly develop and deploy autonomous trucks, with testing scheduled to begin later this year.
The announcement came two weeks after autonomous truck developer Kodiak Robotics said it had become the first company in the industry to launch commercial driverless trucking operations. That milestone came as oil company Atlas Energy Solutions Inc. used two RoboTrucks—which are semi-trucks equipped with the Kodiak Driver self-driving system—to deliver 100 loads of fracking material on routes in the Permian Basin in West Texas and Eastern New Mexico.
Atlas now intends to scale up its RoboTruck deployment “considerably” over the course of 2025, with multiple RoboTruck deployments expected throughout the year. In support of that, Kodiak has established a 12-person office in Odessa, Texas, that is projected to grow to approximately 20 people by the end of Q1 2025.
Women are significantly underrepresented in the global transport sector workforce, comprising only 12% of transportation and storage workers worldwide as they face hurdles such as unfavorable workplace policies and significant gender gaps in operational, technical and leadership roles, a study from the World Bank Group shows.
This underrepresentation limits diverse perspectives in service design and decision-making, negatively affects businesses and undermines economic growth, according to the report, “Addressing Barriers to Women’s Participation in Transport.” The paper—which covers global trends and provides in-depth analysis of the women’s role in the transport sector in Europe and Central Asia (ECA) and Middle East and North Africa (MENA)—was prepared jointly by the World Bank Group, the Asian Development Bank (ADB), the German Agency for International Cooperation (GIZ), the European Investment Bank (EIB), and the International Transport Forum (ITF).
The slim proportion of women in the sector comes at a cost, since increasing female participation and leadership can drive innovation, enhance team performance, and improve service delivery for diverse users, while boosting GDP and addressing critical labor shortages, researchers said.
To drive solutions, the researchers today unveiled the Women in Transport (WiT) Network, which is designed to bring together transport stakeholders dedicated to empowering women across all facets and levels of the transport sector, and to serve as a forum for networking, recruitment, information exchange, training, and mentorship opportunities for women.
Initially, the WiT network will cover only the Europe and Central Asia and the Middle East and North Africa regions, but it is expected to gradually expand into a global initiative.
“When transport services are inclusive, economies thrive. Yet, as this joint report and our work at the EIB reveal, few transport companies fully leverage policies to better attract, retain and promote women,” Laura Piovesan, the European Investment Bank (EIB)’s Director General of the Projects Directorate, said in a release. “The Women in Transport Network enables us to unite efforts and scale impactful solutions - benefiting women, employers, communities and the climate.”