It appears less-than-truckload carrier Yellow Corp. and the Teamsters will renegotiate their labor contract a year early as the two parties have failed to come to terms on proposed network changes, a spokesperson with Yellow confirmed to FreightWaves on Monday.
“On Friday, our board of directors voted to open our National Master Freight Agreement contract, something the IBT suggested several weeks ago,” Yellow said. “Completing One Yellow is essential to our company’s modernization efforts and is necessary for us to maintain and strengthen jobs while we compete against non-union carriers. Opening the contract early requires agreement from both parties; we have notified the IBT of that board decision and await a response.”
After a change of operations (COO) at Yellow’s (NASDAQ: YELL) YRC Freight and Reddaway terminals in the West was approved and implemented last year, union brass has said it is not on board with similar changes at regional carriers Holland and New Penn.
The last phase of Yellow’s multiyear restructuring, which seeks to integrate its brands into a superregional model, increase freight density and lower operating costs, would impact more than 200 terminals in the East, Central and South regions.
The carrier started the overhaul by realigning management teams, creating one sales team for its different brands and bringing all of the operating companies onto the same tech platform. The COOs are expected to eliminate redundancy throughout the network, including scenarios where multiple drivers from different carriers call on the same customer locations.
The entirety of the process includes the closure of 28 terminals, the proceeds from which are being used to pay down Yellow’s roughly $1.6 billion in debt. Yellow has been unable to achieve consistent profitability and maintains the changes are vital to its survival.
A key sticking point in negotiations has been the creation of additional utility positions, requiring drivers to work freight on the docks and at facilities within 175 miles of their home terminal. Changes would also merge seniority lists, requiring some workers to rebid for jobs.
The International Brotherhood of Teamsters said its members have given enough over the past several years in the form of “literally billions of dollars in wage and pension concessions” and that the latest COO violates current contract supplements and is a mere workaround, allowing Yellow to make changes without opening the contract.
“The concession stand is closed,” Teamsters National Freight Director John Murphy told members on a Wednesday update call.
He said he recently informed Yellow to stop meeting with members about the COO and advised local unions to prepare to file unfair labor practices charges if the company attempts to negotiate directly with its members.
Yellow had been conducting meetings with local unions regarding the proposed changes. Some of the feedback gleaned from those sessions was used to craft revised COOs after the first take was shot down by union leadership. Recently, Yellow challenged union heads to put the changes to a vote, saying it was certain it would win.
Union leadership ultimately rejected those changes on March 23 without a vote by membership. The following day the union doubled down on its hard-line stance, giving Yellow a 30-day notice that it would no longer be able to use purchased transportation to move its freight.
Murphy said opening the contract, which expires March 31, 2024, and covers more than 22,000 member employees, is the only fair course of action. But he cautioned that in doing so, “The company will need to come up with sufficient financial improvements.”
He pointed to flaws in the current deal, claiming that wages are “way too low and below standard” and that Yellow has “at least a $5 per hour, per employee labor cost advantage over ABF [ArcBest], our other legacy national master freight agreement carrier.” He also said that Yellow’s pension contribution rate is down to just a little more than 25% of the rate it contributed in 2009.
Yellow has a 3% annual wage increase of 80 cents per hour slated for 2023, with the first half beginning in April and the second half starting in October. The company also implemented a 37-cent cost-of-living adjustment in April.
The Teamsters will now be negotiating contracts with Yellow, ArcBest (NASDAQ: ARCB), TForce Freight (NYSE: TFII) and UPS (NYSE: UPS) this year.
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