Teamsters, YRC agree in principle on new contract

Teamsters, YRC agree in principle on new contract

Terms of the tentative pact between the Teamsters union and the largest unionized LTL operator aren’t final yet, but the extension of the current contract until May 31 should reassure skittish shippers. Photo credit: YRC Worldwide.

The Teamsters union and YRC Worldwide reached a tentative agreement in principle on a new contract, relieving US shipper concerns about labor disruption and a loss of capacity in the less-than-truckload (LTL) freight market this spring. However, the union and the country’s largest unionized LTL operator still have some talking to do before the pact goes to the rank-and-file for a vote.

Negotiations are ongoing over “some language” and “a few supplemental issues,” the Teamsters said in a statement. Both sides have agreed to extend the current contract, set to expire at the end of March, through May 31 to hash out those remaining issues. After those final talks, the next step will be a final “two-person” review of the agreement and then a ratification vote by YRC’s approximately 25,000 Teamster workers.

Details of the agreement were not disclosed and won’t be released until after the two-person meeting. And even then, ratification is not a given. In 2014, for example, union workers rejected an initial proposal from YRC Worldwide before accepting a modified second proposal. This time, YRC Teamsters are looking for recognition of wage and benefit sacrifices made over the past decade to keep the company alive.

YRC Teamsters agreed to a 15 percent wage cut and a reduction in pension contributions in 2009 to help YRC Worldwide avoid bankruptcy. Those concessions were extended through 2019 in the last contract, to help the trucking company get approval for a $1.15 billion refinancing pact from its lenders and a $300 million debt-for-equity swap.

 

The Teamsters for a Democratic Union, a dissident group within the national union, is calling for restoration of wages cut through concessions over the past 10 years and for raises “along the lines” of those won in the Teamsters’ most recent contract with ArcBest subsidiary ABF Freight. It’s questionable, however, whether YRC Worldwide and its operating companies could sustain such an increase. Although profitable, they operate on thin margins.

“The parties have worked incredibly hard to reach a new tentative agreement in principle,” said Ernie Soehl, Teamsters national freight director. “There were a lot of issues, history and emotions involved with these negotiations ... We certainly got creative, but I believe we got every penny we could have and that this contract will improve Teamster lives.”

Substantial LTL capacity

Labor peace at operating subsidiaries YRC Freight, Holland, New Penn, and Reddaway means shippers won’t have to worry about any sudden loss of the substantial LTL capacity provided by those companies. In 2018, YRC Freight had 14,300 terminal doors, handling 10.1 million shipments, while the regional carriers had 6,750 doors and handled 10.4 million shipments.

YRC Worldwide is the fourth-largest LTL operator in the United States, and YRC Freight is the fourth-largest stand-alone LTL carrier, after market leader FedEx Freight, Old Dominion Freight Line, and XPO Logistics, according to the JOC.com Top 25 LTL Carrier rankings. The Overland Park, Kansas-based firm is the largest Teamster employer in the LTL trucking sector.

Shippers had a taste of the kind of disruption they could face last autumn, when UPS Freight, the sixth-largest US LTL carrier, temporarily shut down its network in advance of a second-round contract vote by its Teamsters. A large Northeast regional carrier, New England Motor Freight, shut down permanently last month, placing the blame in part on onerous union contract terms.

The tentative agreement, sight unseen, should help stem any diversion of freight away from YRC Worldwide by shippers nervous about the contract deadline. Shippers hoping for a quick resolution will be closely following rank-and-file reaction to the terms of the tentative deal, however, once those terms are shared with YRC Worldwide employees and become public.

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @willbcassidy.