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.
What accounted for the wide swing in less than three weeks? Management may have succeeded during that time in
persuading the rank and file that the choice came down to accepting a revised offer or kiss their company, and their
jobs, goodbye. But it could have just as easily come down to one word: equality.
The company's first offer included wage increases and lump-sum bonuses for its drivers over the five-year
life of the extended contract. However, it froze salaries for so-called non-CDL employees, or workers who don't
hold a commercial driver's license. These employees include the thousands of dockworkers manning breakbulk
terminals in mostly large, established markets. These cities have sizable voting blocks and have members both
seasoned and active in labor contract issues.
Angered by the exclusion and by the prospect of no wage increases through March 2019, many workers told the company
to pound sand; big markets like Los Angeles, Chicago, Atlanta, Dallas, and Kansas City had a wide swath of "no" votes,
according to data from SJ Consulting, a Pittsburgh-based consultancy. SJ estimated that non-CDL employees account for
7,000 of YRC's unionized workforce of 26,000 to 30,000 members.
Stunned by the outcome, YRC executives scrambled to right the rig. Unlike the first proposal that was sent directly
to the membership without any input from union negotiators, the second proposal was the byproduct of intense bargaining
with Teamster hierarchy. It included, among other things, a softening of vacation restrictions, additional protections
for drivers affected by provisions allowing YRC to subcontract up to 6 percent of its driver work, and language that
would not subject any profit-sharing bonuses to the 15-percent annual wage reductions that were first negotiated in
2010 and will remain in effect through March 2019.
Perhaps most important, the revised offer brought nondrivers to parity with their driver counterparts; all union workers
will now receive annual lump-sum bonuses in each of the extended contract's first two years, with annual hourly
increases—offset by the 15- percent wage reduction—in the next three years.
The change in the wage language, combined with the knowledge that the union's top officials were involved in the process,
may have turned the tide. SJ's data, which took the form of a map of YRC's nationwide terminal network, showed a dramatic shift
in a number of key markets. Many cities that had either rejected the first offer or had split the votes down the middle swung to
ratification the second time around.
The contract extension restarted the all-important debt restructuring process that had stalled after the initial vote. YRC
said today it would go ahead with its plan to issue $250 million in equity, the proceeds of which will be used to pay off part
of its $1.4 billion debt load. In addition, bondholders have agreed to swap an additional $50 million in debt for new equity.
The company is also expected to receive two five-year-term loans for a total $1.1 billion in two five-year-term loans. Each
loan will be repaid at lower carrying costs than the crushing double-digit interest rates that currently accompany the company's
debt service. YRC's lenders demanded a contract extension with labor concessions in return for agreeing to restructure the
company's debt.
The ratification vote buys YRC labor peace for nearly the rest of the decade. But as in 2009 and 2010 when the rank and file
agreed to three extraordinary rounds of concessions to keep the company alive, this latest cycle will not play out painlessly
for labor. The company had estimated its original proposal would, along with unspecified corporate efficiencies, save it about
$100 million a year. There is little doubt that a chunk of those savings will come on the backs of workers, especially since
major wage and pension cutbacks already in effect will be unchanged.
For union employees at YRC's profitable regional division, the hurt of continued concessions is amplified by the bitterness
of feeling like the proverbial good son punished for the sins of the father. The elder, in this case, is YRC Freight, the
company's long-haul division, which has been an operating and financial mess since the old Yellow Transportation Co. bought
rival Roadway Express in 2003 and launched what would become a disastrous, multiyear integration.
"It makes me sick to my stomach," said Stephen Walski, a Joliet, Ill.-based driver for Holland, one of YRC's regional carriers.
Walski, an 18-year employee who had opposed further concessions, said many workers were scared by management's threats that the
company would cease operations Feb. 1 if the revised offer was rejected. Walski said he was suspicious about the wide swing in
the margins of the two votes and charged the union and the company with lying to the workers.
WELCH'S CHALLENGE
In this climate of mistrust, the burden falls squarely on YRC CEO James L. Welch to reassure anxious shippers,
boost the morale of deflated workers, and fend off thrusts by rivals poised to pick off profitable accounts if the
revised deal fell through. Welch will have several gusts of tailwind, namely a better—though hardly robust—economy;
a more disciplined pricing environment that will deter competitors from underbidding YRC for business; and a still-solid terminal
network with prime locations in markets like Chicago. YRC is also past a botched summertime network realignment of YRC Freight
that caused service disruptions, ratcheted up costs, and helped lead to the removal of Jeffrey A. Rogers as the unit's CEO.
Welch, who has since taken over the helm of the unit, said its operating metrics are back to where they were prior to the
start of the restructuring.
YRC also enjoys, from a wage standpoint at least, a seeming cost advantage over its two unionized rivals: ABF Freight System,
a unit of Fort Smith, Ark-based Arkansas Best Corp., and UPS Freight, the LTL division of Atlanta-based UPS Inc. According to SJ
data, the top rate for a YRC Freight driver in central Pennsylvania is $21.10 an hour. The top rates for ABF and UPS Freight
drivers are $22.72 and $26.65 an hour, respectively. The regional data is representative of the nationwide wage differential
between the carriers. Over the past three months, ABF and UPS Freight reached new collective-bargaining agreements with the Teamsters.
Satish Jindel, founder and president of SJ consulting, however, cautions that the data excludes the impact of health, welfare,
and benefit contributions as well as work-rule changes, all of which can add or subtract to the total cost of a carrier's
operations. Thus, there is no certainty that UPS Freight has the highest costs even though it pays the highest wages, he said.
YRC, which currently controls about 9 percent of U.S. LTL capacity, also has what is believed to be a loyal cluster of big
customers, including The Home Depot Inc., Wal-Mart Stores Inc., the Boeing Co., and broker and third-party logistics giant C.H.
Robinson Worldwide Inc. Welch said in an interview yesterday that YRC was regularly communicating with customers about operational
scenarios but was not addressing financial issues with them.
A top-level transportation executive who asked not to be identified said it was in the shippers' best interests for YRC to
remain on the road. "None of these guys want YRC to fail. It will cause panic and it will trigger chaos on multiple fronts,"
the executive said prior to the results of the second vote.
The most significant takeaway from this wrenching and seemingly endless saga is that YRC has gained financial breathing space,
increased its operating maneuverability, and cast its lenders off its back. However, the company still has significant mountains
to climb. It is a high-cost, unionized player in a largely low-cost, nonunion environment. It has old terminals and an aging
fleet—although a fleet's age is less important for LTL carriers that don't log as many miles as their truckload brethren.
One day, it will have to make good on a multibillion dollar pension nut. It still has a billion-dollar debt load, though it
will be carried at lower interest expense than before. And those who've walked this road for the past five years know that
YRC has made similar pledges of improvement before, only to return to the precipice.
Still, Jindel—who during YRC's darkest days in 2009 said that the company would survive while others wrote it
off—believes that Welch is a strong and competent leader who now finally has the tools he needs to make YRC
sustainable. "He has a very long runway to land safely on and bring people home," he 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.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.
Krish Nathan is the Americas CEO for SDI Element Logic, a provider of turnkey automation solutions and sortation systems. Nathan joined SDI Industries in 2000 and honed his project management and engineering expertise in developing and delivering complex material handling solutions. In 2014, he was appointed CEO, and in 2022, he led the search for a strategic partner that could expand SDI’s capabilities. This culminated in the acquisition of SDI by Element Logic, with SDI becoming the Americas branch of the company.
A native of the U.K., Nathan received his bachelor’s degree in manufacturing engineering from Coventry University and has studied executive leadership at Cranfield University.
Q: How would you describe the current state of the supply chain industry?
A: We see the supply chain industry as very dynamic and exciting, both from a growth perspective and from an innovation perspective. The pandemic hangover is still impacting decisions to nearshore, and that has resulted in a spike in business for us in both the USA and Mexico. Adding new technology to our portfolio has been a significant contributor to our continued expansion.
Q: Distributors were making huge tech investments during the pandemic simply to keep up with soaring consumer demand. How have things changed since then?
A: The consumer demand for e-commerce certainly appears to have cooled since the pandemic high, but our clients continue to see steady growth. Growth, combined with low unemployment and high labor costs, continues to make automation a good investment for many companies.
Q: Robotics are still in high demand for material handling applications. What are some of the benefits of these systems?
A: As an organization, we are investing heavily in software that will allow Element Logic to offer solutions for robotic picking that are hardware-agnostic. We have had success deploying unit picking for order fulfillment solutions and unit placing of items onto tray-based sorters.
From a benefit point of view, we’ve seen the consistency of a given operation improve. For example, the placement accuracy of a product onto a tray is far higher from a robotic arm than from a person. In order fulfillment applications, two of the biggest benefits are reliability and hours of operation. The robots don't call in sick, and they are happy to work 22 hours a day!
Q: SDI Element Logic offers a wide range of automated solutions, including automated storage and sortation equipment. What criteria should distributors use to determine what type of system is right for them?
A: There are a significant number of factors to consider when thinking about automation. In my experience, automation pays for itself in three key ways: It saves space, it increases the efficiency of labor, and it improves accuracy. So evaluating which of these will be [most] beneficial and quantifying the associated savings will lead to a “right sized” investment in technology.
Another important factor to consider is product mix. With a small SKU (stock-keeping unit) base, often automation doesn’t make sense. And with a huge SKU base, there will be products that don’t lend themselves to automation.
With any significant investment, you need to partner with an organization that has deep experience with the technologies that are being considered and … in-depth knowledge of the process that is being automated.
Q: How can a goods-to-person system reduce the amount of labor needed to fill orders?
A: In most order picking operations, there is a considerable amount of walking between pick faces to find the SKUs associated with a given order or set of orders. Goods-to-person eliminates the walking and allows the operator to just pick. I have seen studies that [show] that 75% of the time [required] to assemble an order in a manual picking environment is walking or “non-picking” time. So eliminating walking will reduce the amount of labor needed.
The goods-to-person approach also fits perfectly with robotic picking, so even the actual picking aspect of order assembly can be automated in some instances. For these reasons, [automation offers] a significant opportunity to reduce the labor needed to fulfill a customer order.
Q: If you could pick one thing a company should do to improve its distribution center operations, what would it be?
A: Evaluate. Evaluate the opportunities for improving by considering automation. In my experience, the challenge most companies have is recognizing that automation is an alternative. The barrier to entry is far lower than most people think!