Welcome to Check Call, our corner of the internet for all things 3PL, freight broker and supply chain. Check Call the podcast comes out every Tuesday at 12:30 p.m. EDT. Catch up on previous episodes here. If this was forwarded to you, sign up for Check Call the newsletter here.
In this edition: What can Brown do for you, now that the strike has been averted?; the future of the LTL industry; and FedEx pilots stand their ground.
(Image: Memebase)
Tuesday, July 25, is a good day. It’s the day that UPS and the Teamsters have reached an agreement. While the spectacle of 300,000 workers striking against one employer would have been a nice addition to the history books, for the sake of the supply chain it’s a good thing the parties came to a resolution.
FreightWaves’ Mark Solomon has the contract specifics:
- 7,500 full-time Teamsters jobs will be created.
- 22,500 open positions will be filled.
- Existing full- and part-time workers will get $2.75 more per hour in 2023 and $7.50 per more hour over the length of the contract.
- Existing part-timers will be raised up to $21 per hour immediately.
- New part-timers would start at $21 per hour and advance to $23 per hour.
- Wage increases for full-timers will average $49 per hour at the top end of the scale.
- Existing part-time workers will receive a 48% average total wage increase over the next five years.
- UPS Teamsters part-timers will have priority to perform all seasonal support work using their personal vehicles with a locked-in eight-hour guarantee.
The agreement still has be ratified by the union. Voting by the 340,000 members of the rank and file is expected to be completed by Aug. 22.
(Image: Twitter)
In other, much less exciting news, Yellow has averted a strike with the Teamsters as Central States, the pension fund manager for the Teamsters, granted a 30-day payment extension to Yellow. Unfortunately, in the wake of the potential strike and impending bankruptcy, a majority of Yellow’s large customers have ceased operations with the LTL carrier. According to Morgan Stanley research, 97% of Yellow’s customers had already diverted or were considering diverting loads to another carrier.
The future looks grim for Yellow as a majority of freight brokers are moving away from the company. Most of the other LTL carriers have seen this coming for a while now and have contingencies in place to accommodate the additional volumes.
Most of the shippers that just care about the cheapest option to route freight will return to Yellow for their business, but others who might have seen the grass is greener on the other side will likely not as other LTL carriers offer similar price points but are stronger from a service perspective. Continue to advise shippers that other LTL carriers are crucial to a successful network.
Market Check. The Outbound Tender Volume Index measures national freight demand by shippers’ request for capacity. Current OTVI levels have officially dipped below 2019 levels, a dramatic year-over-year change from last year, but as Q3 kicks off, there are factors that may hugely affect the future of outbound tender volumes. Per The Wall Street Journal since actual payments apparently don’t start until October: Student loan interest will start accruing again on Sept. 1, 2023, and payments will restart in October, the Education Department confirmed. As this squeezes consumer budgets, discretionary spending will dramatically fall off, creating even stronger competition among carriers for the available loads.
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Who’s with whom? More like who isn’t with whom. As if there weren’t enough labor union contract negotiations going on right now, there’s another to add to the list. The pilots at FedEx Express, the overnight and time-sensitive arm of FedEx, have rejected a tentative agreement to amend their contract. This amendment would have increased pay by 30% over five years. The driving factor for the 57% vote against, according to FreightWaves’ Eric Kulisch, is “weaker job protections, back pay, alternative pension options and that pay increases were below those achieved by pilots at Delta Air Lines, United Airlines and American Airlines.”
FedEx management is striving to make the network leaner by substituting truck service on certain routes and relying on more outsourced air transportation — on top of closing some pilot bases and maintenance facilities in Los Angeles. After the company boasted record profits, the pilots aren’t looking to make any concessions at the negotiating table.
(Image: Twitter)
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