Teamsters union may modify agreement with YRC

The International Brotherhood of Teamsters union said on Friday it was forming a committee to determine whether it should modify its national freight labor agreement to help trucking firm YRC Worldwide Inc weather the current industry downturn.

The move was a response to YRC's request to defer pension contributions to preserve cash, the Teamsters said. YRC is the No. 1 U.S. trucking company.

"We are forming this committee to review the contract in efforts to help YRCW survive this recession and hopefully come out stronger than ever," Jim Hoffa, Teamsters general president, said in a statement.

Union members would have to approve any proposed changes to the Teamsters' national freight agreement.

YRC, which has been shedding jobs and closing facilities to cut costs in the face of the U.S. recession, faces an estimated $2 billion in pension obligations over the next four years.

Last month, the company said it would seek $1 billion in bailout money from the Troubled Asset Relief Program to help it cover pension obligations, a move analysts said was unlikely to succeed because the company has no financial charter.

In April, YRC received approval from its creditors to use real estate as collateral for the $30 million to $35 million a month the company says it needs to pay to meet its pension obligations.

YRC Worldwide Shuffles Top Ranks

YRC Worldwide has made yet another series of changes in its executive suites.

But will these latest changes help stem the flow of red ink stemming from the $8.9 billion concern? The largest trucking conglomerate in the U.S., YRC has closed terminals, rearranged its geographic coverage, changed its marketing, is heavily discounting its services and still lost $257 million in the first quarter of this year.

Its losses for the last nine quarters are approaching $2 billion. It is dangerously close to violating its loan covenants and may not be profitable in the second quarter. Will rearranging the names on some senior executives' suites make much difference?

Memo to insiders in the trucking industry who may be considering a career move to Overland Park, Kan., home of troubled LTL giant YRC Worldwide:

If you're moving to Overland Park, it might be wise to rent, not buy. And if your nameplate is attached to your door in tape, that might not be a good sign either.

YRC is making yet another series of changes in his senior management team at the $8.9 billion LTL carrier.

YRC President and COO Mike Smid, a trusted and proven former CEO of Roadway Express, gets more responsibility and is charged of all of YRC's regional and national networks. Full Story.....

YRC says it's making progress ... but is it enough?

YRC Worldwide CEO Mike Smid knows his customers and competitors are wondering whether the nation's largest LTL carrier will survive. There's no question in his mind that it will, he told DC VELOCITY at NASSTRAC's 2009 Logistics Conference and Expo in late April.

YRC has made substantial changes in its operations while aggressively managing cash, liquidity, and fixed and variable costs, Smid said. "We have not gone to a bank and asked for any additional money—not a dime," he said. (Two weeks after the interview, however, YRC Worldwide Chairman, President, and CEO Bill Zollars told The Wall Street Journal that the company would ask the federal government for $1 billion in Troubled Asset Relief Program (TARP) funds to help it meet pension obligations.)

Smid believes the recently completed integration of Yellow Transportation and Roadway Express—the integrated unit now goes by the name YRC National—will improve the carrier's outlook. The integration included a network restructuring to eliminate terminals in some areas and expand in others—YRC now operates about 100 more service centers than either Yellow or Roadway did individually, with direct service to an additional 21,000 locations. The carrier also says it has cut average transit times by half a day and boosted on-time delivery rates by several points. Meanwhile, it continues to reduce operating and personnel costs. Full Story.......

Mexican Truckers File $6 Billion Claim Against U.S. in Nafta Spat

A Mexican trade association representing more than 4,500 trucking companies is seeking $6 billion in damages from the U.S. government because of Washington's refusal to allow Mexican trucks to carry cargo over U.S. roads.

The group, Canacar, filed a demand for arbitration under the North American Free Trade Agreement with the U.S. State Department in April, but didn't publicize the move until Monday.

"We want reciprocity," said Pedro Ojeda, a lawyer for Canacar. "The U.S. has notoriously not kept its commitments." Mr. Ojeda said the complaint is the largest such demand made under Nafta, as the 1993 pact is known.

Deborah Mesloh, a spokeswoman for U.S. Trade Representative Ron Kirk, said Monday that, "We take our trade obligations very seriously and this is an issue we've been working on for a couple months." A State Department spokesman said the claim is "being studied."

The arbitration demand is the latest fallout from legislation signed earlier this year by President Barack Obama canceling a pilot program that had allowed Mexican trucks to carry cargo on U.S. roads. In March, the Mexican government retaliated by slapping tariffs on $2.4 billion of U.S. goods.

Affected U.S. industries, many facing import duties of 10% to 20% of a product's value, have been urging the administration to resolve the spat. "During this time of historical job loss, we should be doing everything we can as a country to ensure commerce and trade flow as freely as possible," said Scott Openshaw, a Grocery Manufacturers Association spokesman.

Canacar said its members have lost money and missed business opportunities because Mexican truckers have been restricted to operating within 25 miles of the border on the U.S. side. Mexico City's position is that this restriction violates Nafta.

Nafta called for creating a trans-border trucking program by 2000. But it never materialized mainly because of opposition from the International Brotherhood of Teamsters and its allies in Congress, who have argued that Mexican trucks are unsafe, that some drivers don't know English, and that Mexican authorities don't keep adequate safety records on drivers.

U.S. Transportation Secretary Ray LaHood has been working with members of Congress, industry officials and union representatives to craft a new program that would satisfy safety concerns and reopen the roads to Mexican-based truckers.

Mr. LaHood said on May 21 that his proposal contains "good metrics" for testing the safety of Mexican trucks and assuring that drivers are properly licensed.

Sen. Byron Dorgan (D., N.D.) inserted the language that killed the cross-border trucking program into a spending bill this year. A spokesman declined to comment on the issue Monday.

YRC Worldwide restructures executive team

YRC Worldwide Inc. announced a new organizational structure Tuesday involving seven executives, and the company said four other executives will leave the company.

In a release, Overland Park-based YRC (Nasdaq: YRCW) said Keith Lovetro, former president of YRC Regional Transportation; Michael Rapken, former executive vice president and chief information officer; Jim Ritchie, former president of YRC Logistics; and Christina Wise, former vice president and treasurer, will leave the company by June 30. Full Story.......

West Virginia Motor Truck Association Champion Named

Tim Bailey, a Con-way Freight driver from West Union, was named the grand champion of the West Virginia Motor Truck Association's truck driving championship May 30 in Charleston.

Bailey took top honors after competing in a variety of skill and safety tests.

George "Mike" Miller, a driver with Burns Motor Freight and a Marlinton resident, earned the 2008 Driver of the Year award. Miller has driven for 30 years and logged more than 2.7 million miles behind the wheel with no accidents.

Roger L. Lanham, who drives for UPS Freight, is a Winfield resident and was honored with the 2008 State Police safety award. Lanham has driven for 37 years and 4.2 million miles accident free.

The West Virginia Public Service Commission 2008 Driver of the Year Award was presented to Charles C. Maynard of Hurricane, who drives for UPS Freight. He has 36 years of driving experience.

Other awards included team champion, Con-way Freight of Ann Arbor, Mich., and rookie of the year, John "Tim" Hodges, Con-way Freight, Hurricane.

First place awards were presented for:
straight truck, Tim Bailey, Con-way Freight, West Union;
3-axle tractor semi-trailer, Eddie Thomasson, YRC, Culloden;
4-axle tractor semi-trailer, Daryl England, FedEx Freight, Elkview;
5-axle van, Ralph Gragg, UPS Charleston, South Charleston;
tank truck, Gerald Pugh, FedEx Freight, Marietta, Ohio;
flatbed, Kenneth Grimmett, Con-way Freight, Fayetteville;
twin trailers, Larry Gorby Jr., Con-way Freight; and
sleeper berth, Steve Looney, Petroleum Transport Inc., St. Albans.

All first place drivers are eligible to compete in the American Trucking Associations' National Truck Driving Championship.

Second Pension Fund Seeks Payment From YRC

Trucker says it is in discussions with fund trustees

The New England Teamsters and Trucking Industry Pension Fund is seeking two months worth of pension fund contributions from YRC Worldwide and is threatening to take legal action if not paid.

A source at the Burlington, Mass.-based pension fund confirmed a letter dated May 29 was sent to YRC notifying the company of its past due contributions and that failure to make payments may affect future pension credits and eligibility for pension benefits.

The letter to YRC was similar to one dated May 20 from the Western Conference of Teamsters Pension Trust, which also sought past due payments from the carrier.

In April, YRC received approval from its banking group to provide real estate as collateral in lieu of making payments to its pension funds. Depending on employment levels, the company makes multiemployer pension contributions of $34 million to $45 million per month on behalf of its union work force, according to Securities and Exchange Commission filings.

The source at the New England Pension Fund said the notification, which included a threat to take legal action, was standard procedure when payments are overdue and does not necessarily mean the fund isn’t working with YRC to temporarily defer payments.

YRC said in a statement that it is “currently in discussions with the trustees for the pension funds and the Teamsters regarding the proposed arrangement.”

More Truck Mergers Seen as Carriers Seek Bargains

This story appears in the June 1 print edition of Transport Topics.

A wave of transportation mergers and acquisitions may be on the horizon, as the recession weeds out distressed companies and carriers shop for bargains to help them secure more freight, several industry watchers said.

“You will see a significant increase in deals closing in the next two quarters,” said analyst Andy Ahern, head of Ahern & Associates Ltd. in Phoenix. “The thought process in this industry is: ‘I need to get clients, and I can’t develop them myself.’ ”

Other analysts also said they expect a ramp-up in trucking consolidations but that it could take longer than two quarters.

“There will be deals in 2009,” said Jason Bass, managing director and co-head of the transportation and logistics group at BB&T Capital Markets in Richmond, Va.

However, “they’re going to be more in the distressed or challenged category,” he said. “We’re going to see some orderly liquidation. We’re going to see some distressed M and A.”

A truly “competitive” M and A environment was likely not in the offing, Bass said, “until sometime next year.”

“There is an increased interest in buying companies,” said Lana Batts, principal of consulting firm Batts & Associates, Arlington, Va.

She said that all but the most distressed sellers “are probably going to hold on until 2010 or 2011,” in hopes of securing a higher sale price than buyers may be willing to pay in the recession.

However, at least one firm has signaled its intention to shop for bargain-priced businesses.

“We’re going to pursue other businesses,” Robert Davidson, CEO of Arkansas Best Corp., said last month at the Wolfe Research Global Transportation Conference in New York.

Concerns about scarce freight were underscored last week by American Trucking Associations’ latest tonnage report, which showed both monthly and year-over-year declines. At the same time, another report revealed that the U.S. Class 8 truck fleet actually grew slightly in the first quarter of 2009.

This continuing imbalance of supply and demand prompted one normally acquisitive investment firm to put off prospects for acquisitions until 2010. Full Story.....

YRC Pension Fund Demands Payment

Multi-employer pension plan refers trucker’s accounts to attorneys

The Western Conference of Teamsters Pension Trust, one of approximately 20 separate multi-employer pension plans to which YRC contributes, has referred its 10 YRC accounts to its attorneys for collection.

Sources at the trust confirmed a letter dated May 20 was sent to YRC’s Roadway Express subsidiary based in Akron, Ohio, informing the carrier that pension contributions had not been received for the months of March and April.

YRC has until June 6 to respond to the trust’s demand for payment or be found liable for liquidated damages in an amount equal to 20 percent of contributions, plus interest and collection costs, according to the letter. A source at the trust said YRC was “one of our bigger contributors.”

The Teamsters union said in a May 27 notice to members that while the pension plans are not controlled by the union, most trustees representing employees support YRC’s request to defer pension payments to help the company weather its financial problems. The union acknowledged, however, that some of the pension funds have “taken independent steps that may affect the future status of members’ pensions,” and that members have the right to request more information from the funds.

“At the present time, we are asking all Teamster members at YRC to remain patient and continue to serve YRC’s customers so that the company can survive this economic crisis,” the union said.

YRC officials were not immediately available to comment.

YRC Drivers from North Carolina, Georgia and Mississippi to Compete at NTDC

Four YRC Worldwide drivers won their classes at the State Truck Driving Championships

• YRC Driver Michael Cole of Charlotte, N.C., won the step-van championship and will be making his first trip to the national competition.

• Kevin Dean, a YRC driver of Marietta, Ga., won the straight truck class to proceed to national competition. He's no stranger to Nationals, having competed at the competitions every year since 2003.

• Tupelo, Miss., YRC Driver Tim Harris won the Twin Trailers class to earn a trip to
Nationals. This will be Harris' first national competition.

• John "J.C." Miller, driving for YRC out of Winston-Salem, N.C., won the twin trailers class. He has competed at two previous Nationals.

These YRC Worldwide drivers will represent their states and YRC at the 2009 National Truck Driving Championships from Aug. 17-22, 2009, in Pittsburgh.

Important Information for YRC, Holland, Reddaway and New Penn Teamsters

As has been reported in the media, YRC Worldwide, Inc. (YRCW) has made requests to Teamster-related multi-employer pension plans to defer monthly contributions to help the company preserve cash as it works its way through the economic downturn.

The Teamsters National Freight Division continues to communicate daily with the company, local unions and the funds to assess the situation, and will take all appropriate action to ensure that members’ pension and health and welfare benefits are protected in the short term and long term.

The Teamsters Union’s central goal is to preserve the jobs and benefits of our members and we will do whatever it takes to achieve that goal.

In the December memorandum of understanding, the Teamsters Union negotiated unprecedented access to monitor and better understand the company’s finances. A team of experts has been hired and is performing its due diligence to assist the union in protecting the jobs and benefits of our members.

As you know, multi-employer plans that provide pension and health and welfare benefits to our members are not controlled by the International Union. Nevertheless, we are in dialogue with all affected multi-employer plans to which YRCW contributes.

Most trustees representing the employees on the funds support the idea of a coordinated strategy with respect to YRCW’s request to defer pension payments, and are working on a plan that will best protect the participants.

While most of the funds are working together in response to YRCW’s request, a small number of pension funds have taken independent steps that may affect the future status of members’ pensions. For those of you who belong to those funds, you have the right to request information from your trustees.

At the present time, we are asking all Teamster members at YRCW to remain patient and continue to serve YRCW’s customers so that the company can survive this economic crisis.