An analyst watching contract negotiations between the Teamsters and ABF Freight System says it’s a good sign negotiations were recently extended, and adds that ABF needs wage concessions and work rule flexibility to remain competitive.

The existing labor contract between ABF and the International Brotherhood of Teamsters expired March 31 for the about 7,500 Arkansas Best employees represented by the Teamsters.

The largest subsidiary of Fort Smith-based Arkansas Best is ABF Freight System, one of the largest less-than-truckload carriers in the U.S. Most of the 7,500 are drivers but the union membership also includes dockworkers, mechanics and office staff. Arkansas Best employs more than 10,000.

Existing contract terms were agreed to in 2008 as part of a National Master Freight Agreement (NMFA) with which Arkansas Best, YRC and other trucking companies participated.

Negotiations got off to a rocky start in December when company and Teamster officials issued less-than-kind statements about each other’s negotiating positions.

Last week, both sides issued more positive statements about the contract extension.

The ABF statement read: “ABF and the Teamsters bargaining teams continued to make progress during contract negotiations this week and have agreed to a 30-day extension for the National Master Freight Agreement expiring on March 31, 2013. Negotiations are scheduled to resume during the week of April 8. ABF reassures all customers that it remains business as usual while talks continue, and that they will receive the same superior service they expect from us every day. We thank all of our employees and customers for their patience and commitment to ABF during this important process.”

The Teamsters noted: “Negotiations continued this week with ABF for a successor to the 2008-13 ABF National Master Freight Agreement. Slow progress continues to be made. However, significant issues remain to be discussed. ABF requested a 30-day extension so that negotiations could continue. The Teamsters National Freight Industry Negotiating Committee (TNFINC) agreed to grant a 30-day extension. Any economic improvements in a new agreement will be retroactive to April 1, 2013. As a result, the current ABF-NMFA is extended through and including April 30, 2013. All ABF employees covered by that agreement should continue to work as normal. Members covered by separate stand-alone contracts between ABF and their local unions should contact their local unions for updates.”

Jake Dollarhide, co-founder and CEO of Tulsa-based Longbow Asset Management, is encouraged by the contract extension.

“It meant both sides believe progress is being made and they need more time,” Dollarhide said.

He also agreed with other analysts who said ABF drivers are some of the highest paid in the less-than-truckload industry, and the company needs more flexibility from the unions to implement workflow rules. And at the end of the negotiation, both sides need each other, he said.

“Obviously, Arkansas Best needs those workers who are unionized. … It takes time to work these things out, and the unions, on many levels, are still very powerful in this country,” Dollarhide explained. “But they (unions) also need them (ABF) to have good numbers. So I think that both parties are working to that, and there is a high probability they will come to an agreement.”

A Teamsters statement issued March 15 supports Dollarhide’s comment about the relationship between company and workers.

“TNFINC (The Teamsters) is continuing to try to address the company’s legitimate competitive and operational needs while at the same time protecting good middle class jobs and standards,” noted the Teamsters statement.

An interesting factor of the negotiation is that Arkansas Best is also pursuing a $750 million lawsuit against the Teamsters and competitor YRCW.

Arkansas Best alleges that wage deals between the Teamsters and YRC violated the NMFA. The NMFA, implemented April 1, 2008, was designed to create equal labor costs and other benefit payments among trucking companies with drivers represented by the Teamsters.

The lawsuit, first filed in November 2010, was recently dismissed a second time by U.S. District Court Judge Susan Webber Wright (Eastern District of Arkansas). On Oct. 29, 2012, Arkansas Best appealed the case again to the United States Court of Appeals for the Eighth Circuit (St. Louis). The Circuit has once appealed in favor of Arkansas Best.

Arkansas Best is set to release first quarter 2013 earnings on April 30.

Shares of Arkansas Best (NASDAQ: ABFS) closed Tuesday at $11.33. During the past 52 weeks the share price has ranged from a $19.38 high to a $6.43 low.

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Michael Tilley

Michael Tilley

Michael Tilley is the president and managing editor of The City Wire, a content partner with Talk Business & Politics. He can be reached by email at MTilley@TheCityWire.com.