While the International Brotherhood of Teamsters has put what a local union calls “a tight lid” on information about a proposed five-year contract deal with ABF, analysts are trying to figure out what a new agreement would look like.
ABF and the Teamsters started negotiations for a new contract in January and finally reached an agreement early this month. Local unions had said during the negotiations that ABF was looking for a 6.5-percent wage cut, among other concessions. The agreement is now up for a vote by all union employees.
In a note released by BB&T Capital Markets, analysts pointed out that just because a tentative agreement has been reached doesn’t mean a final contract is forthcoming. In April 2010, union members turned down an agreement reached between the less-than-truckload carrier and the Teamsters.
In the analysis, Thom Albrecht wrote that speculation of a rate cut of 6 percent to 6.5 percent won’t be entirely realized from salaries, wages and benefits. He predicted that a 5-percent cut, about $2.10 an hour, would be more likely.
In addition to cutting wages, Albrecht noted ABF might need to shrink its 275-terminal network, which he called “bloated,” although the company has given no indication that it is thinking about that. He said average shipments per day from each service point, which come out to around 65 shipments, are far outpaced by ABF’s competitors.
Whatever ABF does, it has to be careful not to cut too much, Albrecht warned.
“If workers are disgruntled, then work slow downs may occur, even though such workers have few comparable job alternatives,” he wrote. “Lost productivity cannot be ruled out.” - Jon Ross