ABF Freight Wants Direct Negotiations with Teamsters on New Labor Contract

This story appears in the Sept. 3 print edition of Transport Topics.

Officials of less-than-truckload carrier ABF Freight System said they have notified the Teamsters union they want to negotiate directly on a new labor contract next year and not as part of an industry group.

ABF President Roy Slagle told Teamsters President James Hoffa his company is “prepared to commence negotiations at your earliest availability.” The current five-year labor pact is set to expire on March 31.

ABF, which is based in Fort Smith, Ark., will not use a multiparty committee as it has done in the past. The fleet has used Trucking Management Inc. to negotiate a joint National Master Freight Agreement with the Teamsters covering multiple employers when there were more large LTL carriers.

Since 2008, though, the three largest LTL carriers have negotiated similar but separate contracts.

The two other large, unionized LTL carriers are YRC Worldwide and UPS Freight — the LTL division of the package carrier. The three companies are all among the nation’s five largest LTL carriers.

Galen Munroe, press secretary for the Teamsters, declined to talk about Slagle’s Aug. 13 letter. The Teamsters website said its Freight division represents 80,000 workers.

ABF is the largest subsidiary of Arkansas Best Corp., which ranks No. 13 on the Transport Topics Top 100 list of the largest for-hire carriers.

Arkansas Best told the U.S. Securities and Exchange Commission in February that ABF had about 10,000 employees at the end of 2011, and that about three-quarters of them were represented by the Teamsters.

Salaries, wages and other labor costs make up a majority of ABF’s expenses — about 61%, the parent company said in the SEC filing.

The relative balance among wage rates has been a major point of contention during the current contract’s life. ABF and YRC’s operating companies were scheduled to pay very similar wage rates when the agreements began in 2008.

However, YRC encountered severe financial troubles and secured wage cuts from its Teamsters employees in order to avoid bankruptcy. ABF balked at the unilateral cuts, saying it also needed them because it could not long afford to be the single highest payer of wages in the LTL sector.

A federal district court in Arkansas dismissed ABF’s lawsuit in an August ruling (8-6, p. 6). The Teamsters and YRC were the defendants in the legal action.

Commenting on Slagle’s letter, an Arkansas Best vice president said it is common practice for the company to notify the union of its intentions regarding a new contract as expiration of the current one nears.

David Humphrey, vice president of investor relations, also said serious negotiations will probably begin in the fall, so as to complete a new deal before the March 31 expiration date.

Trucking Management Inc. was founded in the 1960s and still exists — with ABF as a member as well as YRC. Michael McMillan, TMI’s president, said he and other employees now spend 95% of their time on grievance committee issues.

YRC did not respond to requests for comment on the ABF letter.

Beyond that spike for both fuels, Hill did not expect any lasting price increases as a result of Isaac.

“It looks like supply balances of crude are fine right now, and it looks like it’ll stay level, at least,” he said.

Hill also said the Aug. 27 increase in diesel prices was due to recent steady increases in crude oil prices, combined with tight diesel supplies.

“Distillate stocks are still pretty tight, and some of the past few weeks’ run-up in crude prices is still trickling into diesel,” he said of last week’s gain.

The recent string of diesel price increases has been painful for H & W Trucking, Mount Airy, N.C.

“Ouch,” said Gary Harold, the carrier’s president. “We increase fuel surcharges every week. The problem is if it goes up too fast, we can’t recover it fast enough.”

H & W uses EIA’s weekly survey for its surcharges, but that can come a week after the company pays for fuel. Meanwhile, Harold’s company is receiving the surcharge from an old average.

“If it jumps 10 cents a gallon, and we buy 23,000 gallons a week, that adds up in a hurry,” he said.

In weeks of large increases, Harold keeps a close eye on fuel consumption by his 45-truck fleet. He encourages drivers to keep their speeds down and drive cautiously to save fuel, he said.

Beyond his company’s bottom line, Harold is concerned that fuel prices could threaten economy.

“When it gets high, it slows the economy down,” he said. Shippers pass the cost down to consumers, who could buy less, slowing down the economy. “When fuel gets so high, the economy’s going to stop.”

As the nation prepared for Isaac, the White House reiterated that a release from the Strategic Petroleum Reserve is still an option to try to keep fuel prices down but that President Obama had still not decided to do so.

“That option has been on the table for some time, and remains on the table, but we have no announcements to make today,” White House spokesman Jay Carney told reporters on Aug. 28.