The Teamsters union's more than four-month-long battle with LTL giant Yellow Corporation (CCJ Top 250, No. 6) is set to come to a head as early as next week as the Central States Board of Trustees voted Monday to suspend health care benefits and cease pension accruals for Yellow workers after Holland and Yellow Freight missed payments to the Central States Health and Welfare Fund and the Central States Pension Fund for June.
Yellow was due to make a payment to Central States July 15. Suspension of benefits will take effect July 23 and Teamsters say they are preparing for a possible strike as early as July 24.
“Yellow has failed its workers once again and continues to neglect its responsibilities," said Teamsters General President Sean M. O'Brien. "This corporation’s gross mismanagement is another affront to the livelihoods and well-being of 22,000 Teamsters nationwide. Following years of worker givebacks, federal loans, and other bailouts, this deadbeat company has only itself to blame for being in this embarrassing position.”
In June, Yellow requested a two month contribution deferral from the Health & Welfare and Pension funds to be repaid with interest immediately upon a refinancing.
In a statement Tuesday Yellow said it advised Central States Funds that it would defer payment of health and pension contributions for June (due July 15) and July (due August 15) to preserve liquidity as it worked to obtain meetings with the union as well as secure additional financing.
"Two months’ of deferrals to Central States would represent approximately $50 million dollars. Only the first of those two monthly payments has been deferred to date," the statement reads. "The company intends to repay the funds with interest immediately upon securing additional financing and has asked the funds to discuss acceptable terms.”
Yellow and the Teamsters are at odds over implementation of the carrier's One Yellow strategy to improve efficiency, speed, choice and value for its customers. Phases 2 and 3 of One Yellow, which include aligning operations in the Northeast, Midwest, Southeast and Central regions, are set to take place this year. Phase 1, integrating the linehaul networks of YRC Freight and Reddaway in the Western region to support both regional and long-haul services, was completed last year with union approval.
Teamsters have blocked further rollout, citing that the changes violate the union's labor agreement with the fleet – a charge Yellow has denied.
Yellow, the nation’s third largest less than truckload carrier and fifth largest transportation company, last month filed a complaint in the U.S. District Court for the District of Kansas against the International Brotherhood of Teamsters (IBT) and its affiliates, alleging that the labor union breached a binding contract with Yellow and caused more than $137 million in damages by "unjustifiably blocking, for over eight months, Yellow’s restructuring plan to modernize its business, which is necessary to compete against non-union carriers that dominate the LTL business today."
Yellow handles roughly 55,000 shipments per day, a workload most experts see as being absorbed by existing capacity in the event of a protracted work stoppage.
"While I expect we could 'hire up' fairly quickly," said John Luciani, COO of LTL Solutions at A. Duie Pyle (No. 67), "a sudden and prolonged shipment count increase at 10% could cause some short-term pain."
The Teamsters are fighting a similar war on two fronts; one with Yellow and another with UPS. The UPS Teamsters contract covers more than 340,000 full- and part-time workers and expires July 31. The Teamsters have made clear that its UPS members will not work beyond the expiration of the current contract and have already authorized a strike.
A UPS strike would have minimal impact, Luciani theorized, to dedicated or brokerage businesses. However, should the union elect to strike at both companies within a week of each other, Luciani posed that sudden influx of freight could be problematic.
“My concerns are more about the timing of a Yellow failure and a UPS strike happening at the same time. We are already receiving requests from existing customers that also use UPS wanting to know how small of a shipment we will handle and how many shipments would we consider handling," he said. "Because any UPS traffic would only be temporary, my answer to the vast number of customers is 'We will handle zero UPS sized shipments.' All the traffic can do is hurt our LTL business and customers and we will not put our service, quality, and reputation at risk."