ABF local union heads sign off on tentative labor contract

Following news earlier this month that after ABF Freight System, the seventh-largest less-than-truckload (LTL) carrier by revenue, and the International Brotherhood of Teamsters had reached a tentative agreement on a five-year master contract, the Teamsters Freight Division last night said that leaders from about 160 union local unions representing ABF approved the tentative master contract, with the next step in the process being a vote by ABF’s 7,500 union drivers, dockworkers, mechanics, and clerical staffers.

Ballots for the vote will be mailed out on or about June 3 and returned by June 27, according to the Teamsters.

The Teamsters said that this tentative agreement calls for a 7 percent wage reduction, which it said will be recouped by the fifth year of the contract. Other components of the tentative contract include:

• the preservation of current health, welfare, and pension benefits;
• the 7 percent wage reduction will be in effect from the payroll period commencing after ratification through June 30, 2014, when all hourly and mileage rates will increase by 2 percent on July 1, 2014, and the contract then provides for additional 2 percent increases each July thereafter with a 2.5 percent increase in 2017 raising wage rates in the final year above the current levels;
• a modification in the cost of living allowance to limit it only to inflation in excess of 3.5 percent annually and cap the annual payment at five cents per hour;
• approval to push or pull their equipment from the dock in terminals with 75 or fewer local cartage employees;
• the Teamsters allowing ABF to use a small percentage of its total over-the-road miles (4 percent in 2013 and 6 percent thereafter) on outside motor carriers for the terminal-to-terminal line-haul portion of a run in areas where little or minimal backhaul opportunities exist;
• ABF can only subcontract a small amount of local cartage work, which is typically for zip codes with little or no permanent business, only if all employees at a particular location are either working, have been offered to work, or all scheduled to work; and
• the Teamsters can shorten the wage progression for CDL qualified drivers and mechanics to a first year rate of 90 percent with 100 percent of the top rate after one year of service

“Our members’ number one goal was to protect their health, welfare and pension benefits and we achieved this despite all the financial challenges the company is facing,” said Gordon Sweeton, Co-Chairman of the National ABF Negotiating Committee for the Teamsters National Freight Industry Negotiating Committee (TNFINC), in a statement. “We also protected good Teamster freight jobs. Nobody ever wants to see a pay cut, but in light of the company’s struggles and our desire to see the company survive, something needed to be done,” Sweeton said. “It is in our best interests, as well as ABF’s, that this company be given a chance to climb out of this deep recession so that our members’ futures are protected.”

This tentative agreement comes at a time when ABF is having a difficult time financially.

Earlier this month, it reported that for the first quarter revenue at $520.7 million was up compared to $440.9 million a year ago, and that it incurred a net loss of $13.4 million compared to an $18.2 million loss for the first quarter of 2012. ABF said that gains in revenue and tonnage on the LTL side were offset by higher wage and benefit costs for its Teamsters employees. ABF has lost $265 million since 2009.

In December, union locals representing 7,500 drivers, dockworkers, mechanics, and clerical staffers at ABF asked the carrier for a two-year contract with healthy wage and benefit increases.

As previously reported, Teamsters locals were asking ABF for $1-per hour wage increases and additional contributions to their pension, health and benefit package.

The company had already asked that it negotiate separately from chief union rival YRC Worldwide, which has been revived financially under new President and CEO James Welch. And in recent weeks, it was widely reported that YRC made an overture to acquire ABF, which was subsequently declined by ABF.

On the first quarter earnings call Arkansas Best President and Chief Executive Officer Judy R. McReynolds said the Teamsters have publicly recognized ABF’s need for relief, which is encouraging.

“The bargaining teams have already achieved tentative agreements on various workload and flexibility issues that in the past have hampered our ability to adapt rapidly and meet customer requirements,” she said. “At this stage, the bargaining teams have now turned to the economic proposals on wages help and welfare intention. We have proposed initial pay reductions to help lower our wage costs and request the contributions from Teamster employees to their health care coverage just as our nonunion people throughout the company already contribute. On the pension front, we have proposed the uniform contribution rates that would standardize our payments across the 25 plans in which we participate. Contract negotiations are frequently accompanied by a proliferation of rumors, which from time to time, we must address while still respecting the need to let the bargaining teams do their hard work out of the public eye.”

BB&T Capital Markets analyst Thom Albrecht wrote in a research note that this agreement could still face some road blocks, noting that it is not clear if the Teamsters rank and file will pass the contract and whether there will be unforeseen consequences such as work stoppages and slow downs.