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.
Treasury, represented by Special Master Kenneth Feinberg, denied a proposal from the Central States, Southeast, and Southwest fund to make cuts that the fund said were needed to keep it solvent. Feinberg's decision, grounded in the belief Central States failed to comply with federal law requiring it to show the proposal would put it on the path to solvency, staved off sizable pension cuts to the fund's 400,000 participants that would have begun around July 1. It also took Atlanta-based transport and logistics giant UPS Inc. off the hook for as much as $3.8 billion to make up what would have been foregone pension payments had Feinberg blessed the proposal.
For the roughly 13,000 working YRC Teamsters in Central States, and the thousands more in the fund who are retired from YRC and the old Roadway Express, which Overland Park, Kan.-based YRC acquired in 2003, Feinberg's ruling avoids adding insult to a massive injury. As part of a series of mid-2009 concessions to help a financially hemorrhaging YRC conserve cash, its Teamster employees agreed to let the carrier suspend pension payments for 18 months, and resume them at about one-fourth the levels that were in place before the concessions were agreed to. The pension agreement was continued through April 1, 2019, under a 2014 extension to the existing collective-bargaining agreement between the Teamsters and YRC.
Ken Paff, national organizer for the Teamster dissident group Teamsters for a Democratic Union (TDU), said the cuts are more severe than that because the payments are based on a 40-hour workweek; most unionized YRC workers clock more hours but don't receive credit for it, Paff said.
If Treasury had approved the Central States plan, YRC's current workers and retirees would have faced pension cuts ranging between 50 percent and 70 percent on top of what they had given back years ago, Paff said. For example, a worker in the Central States fund who spent 30 years at YRC, or 15 years each at YRC and another firm still in business, would have lost exactly one-half his or her pension, according to Paff. An employee with 15 years at YRC and 15 years with a firm that had become defunct would have faced about a 60-percent cut, according to TDU estimates. An employee with 30 years at a defunct company would have been hit with an estimated 70-percent haircut, Paff said.
The different retiree classifications reflect the structure of multiemployer pension plans that have been a staple of labor-management relations for decades. Covering workers of two or more companies in accordance with a collective-bargaining agreement, the plans are designed to protect workers through the pooling of risk and through economies of scale. It also provides portability of benefits and eligibility for workers who move from employer to employer within the industry covered by the plan.
The program worked fine as long as there were numerous unionized truckers to equitably allocate the costs of meeting the pension obligations. However, as the ranks of trucking companies thinned over the decades due to bankruptcies and consolidations, companies remaining in the plan, such as UPS, became liable for a larger share of the obligations. That share included funding the pension for workers who were employed at bankrupt companies but were never employed at those companies that remained. In 2007, UPS made a $6.1 billion lump-sum payment to Rosemont, Ill.-based Central States to withdraw from the plan, and an additional $1 billion payment to cover transition costs.
The fund has also been hurt by high expenses and subpar investment returns after the sharp decline in asset values during the 2007-08 financial crisis. According to a published report, the fund pays out $2 billion more in retirement benefits each year than it takes in from employers, and there are more than five retired members for every active member contributing to the fund.
Following Feinberg's ruling, Central States officials said that without legislative action or an approved rescue plan, participants could see their pension benefits dwindle to "virtually nothing." Pension-reform legislation has been introduced, but it is stalled in Congress. The fund has the option of submitting a modified application that meets the requirements of the 2014 pension-reform law that Feinberg based his decision on. Fund executives said Friday that they were weighing their next steps.
Paff of TDU said he doesn't dispute Central States' assertions that, absent any changes, the fund will eventually run out of money. He urged the fund to join a broad range of stakeholders, including the Teamsters, TDU, and AARP (formerly known as the American Association of Retired Persons), which are lobbying for pension reform in Congress.
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.
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.