Yellow Corp. is looking to push through operational changes in short order via a letter of agreement with the Teamsters, according to a letter obtained by FreightWaves from a union official to locals. The company is now looking to further expand changes to work rules as well as the usage of purchased transportation. It did outline a potential wage increase but noted that it may not be able to fund it without the help of its lenders.
A Monday letter from John Murphy, Teamsters freight division director, said the struggling less-than-truckload carrier has informed the union it can no longer wait for a normal negotiating process to occur and that it wants the union to accept its proposed contract modifications immediately.
Yellow (NASDAQ: YELL) is in the process of a network overhaul, combining all of its separate operating companies onto the same platform. The changes include shuttering some terminals and redefining employee work rules. The goal is to emerge as a superregional carrier with a lower cost structure. The process impacts more than 200 terminals in the East, Central and South regions.
“By integrating its operating companies and network into a super-regional carrier, Yellow will strengthen jobs while greatly improving its competitive position in a marketplace increasingly dominated by non-union carriers,” a spokesperson with Yellow told FreightWaves. “As the Union has long understood, including through its representative participation on Yellow’s Board of Directors, the completion of the One Yellow implementation this year is of critical importance to Yellow.”
A similar change of operations (COO) was approved at Reddaway terminals in the West last year. Many of the changes outlined in a second phase have already begun as terminals at regional carriers New Penn and Holland have merged with nearby YRC Freight terminals. However, the current COO in its entirety has been rejected by Teamsters brass as it is more involved and covers 70% of the company’s network.
Yellow maintains it has negotiated in good faith with the union, including making numerous changes to its original COO based on feedback it received from members. The spokesperson said the union has improperly held up implementation “as leverage to extract wage increases for the Union’s members.”
“For six months, and counting, after Yellow first proposed the Phase 2 change-of-operations, which mirrored the Phase 1 change-of-operations the Union approved in September 2022, the Union still has not agreed to its implementation,” the spokesperson said.
“Each time it has made a new demand, Yellow has acceded to the Union’s demands, with the expectation that accession would lead to implementation of the overdue Phase 2. But each time Yellow agreed to a Union ask, the Union increased its asks with unreasonable demands.”
Yellow ups demands in negotiations with Teamsters
Yellow’s proposed changes to work rules, which would require roughly one-fifth of road drivers to work freight on the docks, has met considerable resistance from the union. However, Yellow’s proposed letter of agreement dated May 30 seeks to further expand the scope of that program to include the company’s entire operation.
“Yellow’s operations will be integrated and streamlined so that one driver will pick up and deliver on behalf of the family of brands, and all employees may service all brands and may handle freight and perform all assigned job functions at any terminal or on behalf of any customer, across operating companies, without regard to whether the Company has completed its planned consolidation of operating entities into a single operating entity,” the new letter of agreement read.
Further, Yellow is seeking to increase its use of purchased transportation to 29% of total miles across the combined entity.
The National Master Freight Agreement (NMFA) allows Yellow to use outside capacity for road transportation, which is similar to the way nonunion LTL carriers operate. However, the collective bargaining agreement caps the usage percentages. Purchased transportation can account for 8% of miles at Holland, 20% at Reddaway and 29% at YRC Freight.
New Penn isn’t utilizing purchased transportation currently, the letter said.
As negotiations intensified between the two parties in March, the Teamsters told Yellow it would no longer be able to use outside capacity at any operating company. The 30-day notice to cease usage was one of many actions taken in the recent back-and-forth.
The new letter of agreement would officially require the two parties to fully reopen the NMFA early. Both parties previously agreed to revisit the NMFA, which expires March 31, 2024, in hopes of reaching a deal on Yellow’s proposed changes. However, the letter said that further modifications to the agreement may be required to fund a potential wage increase.
The new agreement also references a “yet to be disclosed” third phase of operational changes.
As part of the agreement, Yellow is agreeing to pull forward contractual wage increases of 40 cents per hour (1 cent per mile) set to go into effect on Oct. 1. It would also add a 60 cent hourly wage increase (1.5 cents per mile) above that, but noted that it “does not have the means to pay the increases” currently. If the agreement is approved, Yellow would look to fund the wage increases after it receives new financing.
Yellow said it would expedite conversations with lenders regarding the proposed wage increases but has also noted in the past that it would seek to refinance its $1.5 billion in debt after coming to terms on the COO with Teamsters.
The company said it would also look to divert planned health and welfare contribution increases slated for August into wage increases if the health and welfare funds agree to the change.
Other protections around primary lanes, local cartage drivers and seniority lists were noted in the agreement.
Murphy said the proposed letter of agreement presents “a one-way street in favor of the company” and referred to Yellow’s conduct as “offensive.”
He said the Teamsters have already conceded billions in wages, benefits and work rules in the past and that it wanted to use a normal bargaining process in negotiations, which includes surveys, local meetings, establishing bargaining committees, etc.
A separate notice obtained by FreightWaves showed Murphy has a call planned with the rank and file on Tuesday evening. No details were provided but the union may be seeking a strike authorization as it did with members at ABF Freight, an ArcBest (NASDAQ: ARCB) subsidiary, last month. The Teamsters labor deal with ABF expires June 30.
“By stonewalling Yellow’s implementation of Phase 2, the Union has impaired Yellow’s ability to continue as a going concern and jeopardizes the jobs of its members,” the spokesperson said. “Indeed, far from taking reasonable steps to work with Yellow to reach a solution, or acting with the urgency the situation demands, the Union continues to choose heated rhetoric over reason and remains entrenched in its irrational and indefensible position.
“What is truly offensive is the utter disregard IBT senior leadership has for the 22,000 Teamsters Yellow employs who are now at serious risk of losing their good paying union jobs.”
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