YRC Freight and Teamsters come to terms on a tentative labor agreement

With a March 31 deadline looming, YRC Freight, the largest subsidiary of less-than-truckload (LTL) transportation services provider YRC Worldwide, and the Teamsters National Freight Negotiating Committee (TNFINC) announced on Thursday, March 21 that they have come to terms on a tentative agreement in principle for a new collective bargaining agreement.

Details of the agreement were not made publicly available.

TNFINC said that it has granted a contract extension to the current agreement with YRC Freight through May 31 in order to allow both parties to finalize some language and a few supplemental issues and to also allow the union’s ratification process to take place.

“The parties have worked incredibly hard to reach a new tentative agreement in principle,” said Teamsters National Freight Director and TNFINC Co-Chair Ernie Soehl in a statement. “There were a lot of issues, history and emotions involved with these negotiations. I want to thank the union’s bargaining committee for its hard work and support. We certainly got creative, but I believe we got every penny we could have and that this contract will improve Teamster lives.”

Prior to this tentative deal being reached, both labor and management were under strong pressure to hit a home run in the YRC talks. The Teamsters said they wanted to restore a 15% wage and 75% cut in pension concessions made a decade ago in order to lay claim to what Teamsters President James P. “Jim” Hoffa calls “North America’s strongest union.”

YRC has been under pressure as it struggles to restore profitability in even what the union concedes is a “cutthroat” LTL market place. YRC, and especially its regional units, were increasingly susceptible to freight diversion by skittish shippers the closer the talks got to the March 31 deadline.

But as officials for UPS could attest, sometimes the Teamsters require extra innings in order to be satisfied. UPS thought it had a ratified contract after 54% of Teamsters rank-and-file voted for it. But that contract still is not in place because of fine print involving “supplemental” side agreements with certain locals.

Bargaining between the parties resumed in mid-March for a new National Master Freight Agreement regarding long-haul YRC Freight and its regional LTL subsidiaries, Holland, and New Penn.

Had the talks gone past the March 31 deadline, there was little chance of any work stoppage. In fact, the union had encouraged its 7,000 or so YRC members to “perform their jobs, work hard and be the professionals that they are,” according to an internal memo sent to members.

Not surprisingly, money is the big issue. Detailed economic proposals are the heart of discussions. But at press time, both sides were without an agreement over about what the long-term wage and benefit package needs to be to retain and attract drivers, dockworkers and other employees with the three companies.

TNFINC’s Soehl previously said that the union has offered significant operational improvements to grow each company in the expanding e-commerce world and addressed inefficiencies that hinder the growth of each company, adding that the Teamsters believe those changes have been undervalued by the companies. And he added that the Teamsters have acknowledged that “the companies continue to face financial challenges in the cutthroat LTL marketplace…but our members, too, have faced significant economic hardship after a decade of givebacks and are not interested in treading water monetarily, seeing changes to their health care, or erosion of standards.”

The Teamsters realize the union operates in an industry that is 95% non-union – compared to the days prior to deregulation when trucking was 95% union. Recently, New England Motor Freight, once the 17th-largest LTL carrier, and ten subsidiaries declared bankruptcy, throwing as many as 4,000 International Association of Machinists members into the unemployment line at least temporarily.

Stifel analyst Dave Ross wrote in a research note that this tentative deal represents “a positive first step” for YRCW and its shareholders, with the caveat that more information is needed on the structure and terms of the deal to assess its likelihood of passing the rank and file vote. And he added that on a longer-term the company still has labor and equipment cost challenges that may or may not be addressed in the new contract proposal.