YRC-Union Pact to Raise Pay, Give Carriers New Flexibility

By Jonathan S. Reiskin, Associate News Editor

This story appears in the Jan. 14 print edition of Transport Topics.
YRC Worldwide’s proposed new contract with the Teamsters union raises wages by $2.20 an hour over five years, increases company pension payments, and sets up a new class of “utility employees” to perform more job duties in exchange for higher pay.
A key Teamsters committee Jan. 8 endorsed the proposed contract, which the union then posted on its Web site. The endorsement could lead to members’ ratification of the new five-year National Master Freight Agreement by Feb. 9.
The new utility-employee classification gives management more flexibility and “will allow the companies to compete better in the less-than-1,000-mile markets of next-day and second-day delivery where there’s more growth,” Jim Roberts, president of Trucking Management Inc., the labor-bargaining arm of YRC, told Transport Topics.
“Facing a continued erosion of freight levels for the foreseeable future, the union took the bold step of enabling the largest carriers to grow their operations by creating new shorthaul, expedited operations, as well as look at new ventures in the truckload market,” the Teamsters said in a briefing paper aimed at their roughly 65,000 members who are YRC employees.
TMI negotiates on behalf of YRC’s Yellow Transportation, Roadway Express and USF Holland — all less-than-truckload carriers. New Penn Motor Express, another YRC carrier, employs Teamster labor under the terms of a “me too” contract. The current five-year contract expires March 31.
YRC and the International Brotherhood of Teamsters announced agreement on a new deal on Dec. 13 (12-24 & 31, p. 1). On Jan. 8, the union held its “two-man meeting” on the contract, with two representatives from each affected local gathering at Teamster headquarters in Washington, D.C.
Union spokesman Galen Munroe said the proposal was endorsed in a voice vote.
“There were more than 300 people in attendance, and only one voted no,” Munroe said.
After the vote, Tyson Johnson, the union’s lead negotiator, said in a prepared statement, “While the longhaul trucking industry is operating in a difficult economic environment, this tentative agreement protects existing jobs, maintains a strong wage-and-benefit package, and provides new language allowing growth at the largest carriers.”
Besides the wage increase of $2.20 an hour or 5.5 cents a mile, with $1 an hour extra for the new utility classification, the deal would pay an extra $1 an hour per employee each year in pension, health and welfare contributions — $5 an hour over the life of the contract — so the plans can meet obligations created by the federal Pension Protection Act of 2006.
Roberts said the $5 figure was more than YRC would have liked to pay, but the company was obligated to do so because of federal mandates from the PPA.
However, he praised the union for agreeing to create the utility employee classification.
“The Teamsters are to be congratulated for this. It allows the companies to get away from the traditional hub-and-spoke system under which they currently operate,” Roberts said.
With employees doing more types of work, Roberts said “they can touch the freight fewer times” and move it along more quickly. He said this classification would be particularly helpful for Yellow, Roadway and USF Holland.
The proposal also calls for reducing the cap on intermodal-railroad miles to 24% of total freight-miles from 26%, immediately, and then down to 19% in 2012.
The proposal says, “The parties recognize that the current shipping markets demand expedited delivery of freight in a manner that may not be accomplished by hauling certain freight by rail. These market demands create a need to reduce the amount of freight hauled by rail and to use alternative methods of substitute service.”
Regarding that substitute, the cap on purchased, over-the-road transportation will rise to 9% from 4% of total miles traveled over the contract’s term.
The Teamsters statement said the vote on ratification of NMFA and 29 supplemental agreements would start Jan. 14.
Edward Wolfe, transportation analyst at Bear, Stearns & Co., estimated that the new contract represents acceleration in pension payments but deceleration in wages.
Wolfe calculated that the 2003-08 agreement allowed wages to increase by 2.2% a year on average; pension contributions rose by 5.9% a year and the combined annual total was 3.4%.
In contrast, he estimated the 2008-13 proposal allows wage growth of 1.9% a year, pension growth of 7% and a combined total of 3.9%.
The other large, unionized LTL carrier that must complete a new pact by the end of March is ABF Freight System, which was once a part of TMI but now negotiates separately.
David Humphrey, director of investor relations for ABF parent Arkansas Best Corp., said, “We have had preliminary discussions and exchanged supplemental proposals with the IBT. We had agreed with them that we would wait to begin formal discussions after the YRC Worldwide two-man meetings. We are available to begin formal negotiations when the IBT is ready.”
Humphrey added ABF is “confident that we will be able to reach a timely resolution on a labor agreement that secures the retirement benefits of our employees and allows ABF to grow and add more employee jobs.”