ABF Fights Concessions Given by Union to YRC
This story appears in the Nov. 8 print edition of Transport Topics.
ABF Freight System launched a two-pronged offensive against Teamsters union labor concessions for YRC Worldwide, saying the breaks for YRC violate the terms of the National Master Freight Agreement and unfairly disadvantage ABF to the tune of $750 million.
On Nov. 1, ABF simultaneously filed a grievance under the terms of the five-year labor pact and a civil lawsuit in U.S. District Court in Fort Smith, Ark., also where ABF’s headquarters are located. The less-than-truckload company said the $750 million reflects its actual and projected losses from the Teamsters’ concessions through the end of the NMFA deal in March 2013.
ABF and YRC are the two main employers that signed the NMFA with the Teamsters in 2008. The contract sets compensation rates for unionized LTL carriers. (Click here for related story.)
“It is our firm belief that the three rounds of concessions granted to YRC by the International Brotherhood of Teamsters . . . are in violation of the NMFA. The NMFA applies to every company that signed it and, quite simply, with these three amendments, that is no longer how it’s being applied,” ABF President Wesley Kemp said in an open letter to his employees.
Teamsters General Counsel Brad Raymond responded by calling ABF’s lawsuit and grievance “frivolous and without merit.”
“The Teamsters will vigorously defend against the lawsuit and grievance and will withhold further comment until we have thoroughly reviewed the documents,” Raymond said in a union statement.
The combined revenue of YRC’s national and regional operations makes it the largest LTL carrier on the Transport Topics 100 for-hire carriers list, while ABF is the fifth largest.
ABF, the largest operating company of Arkansas Best Corp., is conducting its campaign in a very public manner. Not only did ABF issue a press release, it also is operating an extensive website — www.abflegalaction.com — to make clear its position and the reasoning behind it.
An Arkansas Best executive acknowledged this is somewhat at odds with the company’s historical sense of reserve, but management feels the company is threatened in a very basic way.
“This is about the future of our company. We need to ensure that,” said Arkansas Best Vice President David Humphrey. “We want to continue to provide jobs to our employees and we have shareholders to consider.
“This lawsuit is our last choice. Anyone who knows us knows we are very patient, and we’ve evaluated all of our options. It’s unfortunate the situation has come to this,” Humphrey said.
He further explained that ABF does not think the conventional NMFA grievance procedure will work well in this case because the pool of potential grievance judges is the same as the defendants in the lawsuit. Therefore, part of the lawsuit asks the district court to appoint a special outside grievance panel.
“We view Arkansas Best’s legal actions as the last-ditch effort by the company to bridge its cost-structure gap with the LTL industry,” stock analyst Jason Seidl wrote to Dahlman, Rose & Co.’s clients on Nov. 2.
“We maintain our ‘hold’ rating as we continue to monitor the carrier’s ongoing efforts to manage its industry-high cost structure, seek legal remedy and inch closer to profitability,” Seidl said.
LTL carrier Bilkays Express Co., which is based in Elizabeth, N.J., employs Teamsters labor under an independently negotiated contract similar to the NMFA. Vice President Robert J. Kortenhaus said the ABF argument has some resonance for him.
“All carriers that are party to the NMFA in some way should participate on a level playing field, or this won’t work. The Teamsters should offer the same concessions to all. They have to be realistic and not price themselves out of the market,” Kortenhaus said.
