The contract between ABF Freight System and the Teamsters expired yesterday and progress toward a resolution is slow, according to analysts at Stifel Nicolaus.
All parties involved are now working under a National Master Freight Agreement for the next 30 days while talks progress.
According to reports posted on the Teamsters' Website, the most recent proposal ABF brought to the union contained a 15-percent wage cut. The union rejected that proposal. Negotiations are to resume April 8, according to ABF.
Stifel Nicolaus analysts point out shippers have not seen an less-than-truckload work stoppage since 1994, and the little freight diversion seen so far this year means shippers expect ABF and its unions to be able to reach an agreement. But by all accounts, ABF and its union has yet to start talking about significant contract changes. Stifel Nicolaus warned shippers, however, to have contingency plans in place if the last week of April rolls around without a contract.
If no deal is reached by April 30, Stifel Nicolaus counts another NMFA extension or a total work stoppage among the two possible outcomes of the negotiations. More likely is a new long-term or two-year contract with wage and benefit concessions; a two-year extension of the current contract; or a new two-year contract with no concessions.
Concessions, the analysts wrote, would put ABF on a more level cost structure as its competitors. If no concessions are granted by the unions, ABF will continue to lose out to its competition.
“We believe wage/benefit concessions would be good for ABF, as it would reduce the company's operating expenses and improve the operating ratio and EPS (earnings per share) immediately,” the analysts wrote. “While it would be fair, in our view, for the company to get concessions, the fact no deal has been reached yet means the union is fighting it.”
ABF and the Teamsters began talks in January concerning the existing contract, which expired March 31. According to a previous ABF press release, the company’s hopes to reverse the $230 million it has lost since 2009, while becoming better able to compete in a shifting trucking industry. The unions counter that assessment, saying ABF wants to reduce paid time off, expand the use of truck tracking devices and add subcontractor use, among other things.
“ABF reassures all customers that it remains business as usual while talks continue, and that they will receive the same superior service they expect from us every day,” according to a posting on the company’s Website. “We thank all of our employees and customers for their patience and commitment to ABF during this important process.” - Jon Ross