Teamsters Deal Brings Flexibility, Value to ABF

by Marty Cook  on Monday, Dec. 9, 2013 12:00 am  

At least as important as the labor cost reduction is the flexibility the company now has. The regional supplements give ABF Freight the right to adjust work rules for each union to maximize efficiency and lower costs.

Arkansas Best officials have said the labor agreement was the first step, and the company revealed in an SEC filing last week that it plans to close or consolidate 30 of its 277 terminals. It’s a move analysts were expecting because other carriers have also reduced their networks to streamline operations, and the labor agreement gave Arkansas Best greater latitude in such decisions. “They have much more flexibility,” Delco said.

ABF’s deal with the Teamsters is something a key competitor, YRC Worldwide, is hoping to reach soon. YRC Worldwide, based in Overland Park, Kan., is in tighter straits than Arkansas Best and is attempting to negotiate an extension of its current contract with the Teamsters.

A union committee was scheduled to evaluate the YRC Worldwide proposal late last week. The current labor deal between the two entities runs through March 2015, but YRC Worldwide needs an extension in order to restructure debt.

Interestingly, YRC Worldwide broached the subject of buying Arkansas Best this past spring before being turned down. Since then, Arkansas Best has negotiated a labor deal for its less-than-truckload carrier, something YRC Worldwide and its subsidiary YRC Freight need to arrange.

The Teamsters have made several salary concessions in recent years with YRC Worldwide, but Delco believes this current negotiation mainly will revolve around extending the agreement through 2019. YRC has $1.4 billion in debt, and creditors are insisting on a longer labor agreement as a prerequisite to refinancing.

 

 

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