Teamsters Approve Deal With ABF, But Several Side Pacts Rejected

This story appears in the July 8 print edition of Transport Topics.

Teamsters employees at ABF Freight System approved a new master contract, but additional talks will be required later this month because some side agreements were rejected.

The carrier announced the approval June 27, one day after UPS parcel workers also approved a national contract but rejected 17 of 35 side agreements, known as riders and supplements, setting the stage for additional talks.

The contract covers more than 7,000 workers at ABF, the less-than-truckload unit of Arkansas Best Corp. Six of 27 side agreements were voted down.

More talks also are needed between the union and UPS Freight, where workers voted down a tentative agreement by a 2-1 ratio.

“We know this was a difficult decision for our union workforce, following many sacrifices made in recent years by our nonunion employees, and we look forward to resolving the remaining supplements in the near term,” said Roy Slagle, CEO of ABF Freight, based in Fort Smith, Ark.

Teamsters leaders sounded a similar note about the deal, which includes a 7% pay cut.

“We understand the sacrifices our ABF members are making,” said Gordon Sweeton, co-chairman of the National ABF Negotiating Committee. “Once ratified, the national contract will protect our members’ health, welfare and pension benefits and will also give the company the ability to compete in a very tough trucking environment.”

About 80% of ABF Teamsters voted on the contract proposal. Neither party disclosed the vote totals, but other sources said the approval rate was 52%.

The contract also includes gradual increases until current pay levels are restored in 2018.

More changes could be in store at ABF, in line with management commentary before and during the talks that its service network could shrink.

“Management continues to evaluate ABF’s network to reduce its cost structure,” said a report from Benjamin Hartford at Robert W. Baird & Co. “We believe that, in addition to the Teamsters wage concessions, ABF will likely rationalize its footprint by consolidating terminals and linehaul routes.”

An ABF spokeswoman declined further comment.

“We are looking forward not only to a more efficient, profitable ABF but also to continued strong contributions from our non-asset-based, emerging businesses,” Arkansas Best CEO Judy McReynolds said. “Our emerging businesses are all poised for additional revenue growth and greater cross-selling opportunities, both within our existing ABF customer base and throughout the broader transportation marketplace.”

ABF has struggled with losses that topped $200 million since 2009, paying full contract wages and pensions while larger union competitor YRC Freight enjoyed 15% lower wages and reduced pension contributions.

The ABF master contract also includes a one-week reduction in vacation as well as new provisions to help balance freight flows with limited subcontracting.

Contract changes could save as much as $60 million, said a July 1 report by a BB&T Capital Markets analyst. Based on 2012 results, that could change a loss of about $20 million last year into an operating profit of up to $40 million.

ABF and the union didn’t disclose a timetable for required local meetings between union leaders and workers before talks between the two sides. The ABF contract had to be extended twice before a tentative agreement was reached in May.

Meanwhile, UPS and the Teamsters union agreed to extend their contract that had been due to expire on July 31 to allow more time for talks to resolve the rejected side agreements.

Those agreements, which address contract provisions such as start times, require further talks and must be approved through a new vote before the contract can take effect. The master contract was approved by 53% of those who voted.

The extension has no specific expiration date, though it contains a provision to be terminated with 30 days’ notice by either side.

The union said UPS also has agreed not to increase retiree health insurance costs as of Aug. 1. Last December, UPS, Atlanta, said it would impose an increase on that date.

UPS didn’t issue a separate statement, referring requests for comment to the union’s announcement.