As freight volumes plummet, caught in the undertow of the coronavirus disease 2019 (COVID-19) pandemic, Northeast regional less-than-truckload (LTL) carrier A. Duie Pyle is temporarily furloughing employees and reducing wages to weather the economic storm.
Senior leadership, from the vice president-level up, will take a 15 percent wage cut, while employee wages will be cut 10 percent. The cuts will last through June 15.
Those making less than $15 dollars an hour will not see their wages cut, and no wages will be cut below $15 an hour, the carrier said in a memo obtained by JOC.com.
The temporary furlough plan will let employees voluntarily take time off without pay through June 15. All health and other benefits will be continued, A. Duie Pyle chairman Peter Latta said in an interview Tuesday. Latta sent the memo to employees on Monday.
Pyle is not the only LTL trucking company feeling the pain. The LTL industry, overall, is more dependent than truckload companies on industrial goods that today are considered non-essential. E-commerce is beginning to change that, but perhaps not quickly enough.
ArcBest is cutting hours for nonunion hourly workers and wages for salaried employees 15 percent at LTL subsidiary ABF Freight System, the company said in a US Securities and Exchange Commission filing Tuesday.
“We anticipate that the second quarter 2020 expense reduction associated with the changes in the nonunion compensation and benefits mentioned above will be in a range of $15 million to $20 million, provided the measures are maintained throughout second quarter 2020,” the company said. ArcBest also said there would be “workforce reductions” at ABF Freight. ArcBest last month borrowed $225 million under its credit agreement.
Other companies are making pay cuts as well, said Satish Jindel, president of SJ Consulting Group, noting that many of the shipper customers have furloughed employees. LTL carriers are seeing deep reductions in freight volume as non-essential businesses are shuttered.
Rare cuts for strange times
“Nobody has a playbook for this COVID tsunami,” Latta told JOC.com. “This is the first time I’ve ever made a pay reduction decision in 35 years of leading the company. We decided it was better to take action sooner rather than wait in hope that things would turn quickly.”
Latta and his co-owners have stopped drawing salaries. “We culturally believe that owners lead from the front, that’s in essence what we’ve done,” he said.
At A. Duie Pyle, shipment counts are down about 30 percent year over year in early April, Latta said. “In my 35 years here, I’ve never seen a ship turn so quick,” he said. “In the first part of March, shipments were up 6 to 7 percent [year over year]. Around March 16, it turned.”
The privately owned West Chester, Pennsylvania-based carrier is still a “financially resilient and strong company,” Latta said. “We’re not doing this out of desperation, but to remain strong. We thought it prudent to take measured steps, seeing what COVID is doing to the Northeast.”
Pyle’s home territory stretches from Maine to Virginia and Ohio, but partnerships with other LTL carriers extend its service map to the West Coast. Pyle was the fastest-growing LTL carrier in 2019, raising revenue 9.9 percent to $386 million, according to SJ Consulting Group.
Now, it’s in the current epicenter of the pandemic. “Unquestionably, this COVID tsunami rolled into the Northeast hardest and fastest,” Latta said. Northeastern states quickly moved to shut down non-essential businesses, but not every state agreed on what was non-essential.
“We were afraid we’d wind up with a backlog of shipments that couldn’t be delivered, but we managed that successfully,” he said. “But it’s a tough time and none of us can tell us what’s going to happen,” or when non-essential freight might be ready to start moving again.
Latta said the company will meet its temporary furlough goals with volunteers. “We decided to create the temporary furlough program for those who are at higher risk,” he said. “I talked to one senior driver who told me, ‘I’m scared. I’m supposed to have an operation next month.’”
For those who may be more susceptible to COVID-19, “this is a way to bridge the gap until June 15. We haven’t laid off anybody. We want to keep the team intact.” By June 15, he hopes, businesses will be reopening with an economic recovery starting to get under way.
Latta is the grandson of company founder, Alexander Duie Pyle. “We quietly observed the 96th anniversary of our founding on April 1,” he said. “We survived the stock market crash, the Great Depression, World War II, deregulation. We’ll survive this, learn lessons from it, and be better.”