Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
Teamsters union leaders, including General President James P. Hoffa, did not know until late April that
YRC Worldwide Inc. had made an informal and unsolicited offer to acquire rival Arkansas Best Corp., even though
the takeover proposal was discussed and approved weeks before by a YRC board that includes two members appointed
by the Teamsters, according to a well-placed source.
One of those union-appointed members is Harry J. Wilson, a renowned financier who today is chairman and CEO of
MAEVA Group LLC, a New York-based corporate restructuring firm. In February, MAEVA signed a potential multi-million
dollar contract with YRC for advisory services in "connection with one or more potential transactions and/or strategic
initiatives."
According to a Feb. 21 filing with the Securities and Exchange Commission (SEC), MAEVA signed a contract with
YRC, effective Feb. 1, to perform advisory services in "connection with one or more potential transactions and/or
strategic initiatives" that YRC may pursue.
According to the filing, MAEVA is to be paid $250,000 in monthly fees for the next four months from the date
of the filing. The firm would also receive a maximum of $5.5 million in what YRC called "completion fees." The
agreement expires on Dec. 31 unless extended by mutual consent or terminated by YRC with 30 days written notice,
according to the filing.
The other Teamster-appointed member is Douglas O. Carty, co-founder and chairman of Switzer-Carty Transportation Inc.,
a Canadian company specializing in school bus transportation services.
In an e-mail today to DC Velocity, Wilson said his firm followed the proper legal guidelines in disclosing
the agreement with YRC. Wilson added that the Teamsters were "directly informed of the retention" to ensure they were
aware of it. He declined to comment on whether he notified the union at or around the time that YRC's board approved
the buyout plan, citing confidentiality of board discussions.
In an e-mailed statement yesterday, YRC said the buyout offer was "fully vetted by its management and board," and
it was their "mutual conclusion that it was very much in the interest of all shareholders and stakeholders."
According to the source, on or about April 29, the union became aware of a March 25 letter from James L. Welch to
Arkansas Best President and CEO Judy McReynolds referencing a March 22 face-to-face meeting between the two executives
to discuss a possible business combination. The meeting was held at Arkansas Best's corporate headquarters in Fort Smith, Ark.
The Teamsters, which also represent ABF workers, reacted angrily to word of the possible buyout. Hoffa said in a statement
Friday that it was "unconscionable" that YRC would move on a possible acquisition of Arkansas Best while the union and ABF were
in the midst of highly charged and sensitive contract talks. "This interference in the collective bargaining process is an
affront to all of the hardworking men and women at both companies," Hoffa said.
The source said Hoffa was effectively blindsided by news of the takeover talks. Teamsters spokesman Galen Munroe said
the union would have no comment beyond last Friday's statement.
On May 3, ABF and the Teamsters' international union agreed on a tentative five-year contract. Leaders of Teamster
locals representing ABF workers will meet early next week to review the proposal. If the locals approve it, the compact
will be mailed to ABF's rank-and-file for a ratification vote.
The Teamsters' biggest concern appears to be that without a ratified collective bargaining agreement in place, ABF workers
would fall under a less-generous YRC compact if the two companies were combined. The union also worries that a merger would
leave many of the 7,500 ABF Teamsters out in the cold because YRC workers would likely be chosen to fill the same job applied
for by two candidates.
News of the takeover talk was first reported on DC Velocity's website last Wednesday. That evening, Arkansas Best
issued a statement confirming it was approached in late March by YRC about a possible acquisition of ABF but told YRC in early
April that it wasn't interested at that time. Arkansas Best cited, among other things, intense negotiations with the Teamsters
over a new collective bargaining agreement with ABF that the company has said repeatedly would be critical to its efforts to
remain competitive. ABF has the highest labor costs in the less-than-truckload (LTL) industry.
The companies have not spoken since early April, Arkansas Best said in its statement.
Welch said in a statement the next day that YRC wants to buy all of Arkansas Best, whose businesses include ABF—which
accounts for about 80 percent of overall revenue—and Panther Expedited Services, the nation's second largest expedited
transportation provider. According to the source, YRC floated an informal proposal for Arkansas Best of $18 a share. Near the
close of trading on Wednesday, Arkansas Best's market capitalization stood at slightly more than $432 million.
Welch told other media outlets (he would not speak to DC Velocity) that a transaction would add significant traffic
density to the combined LTL network. Welch added that after a two-year effort to revamp YRC's operations to improve efficiencies
and drive down costs, it was time for the company to take a bold growth-oriented step.
WILSON'S ROLE?
What's unknown is the level of Wilson's involvement, if any, in a potential YRC-ABF transaction. Wilson, a renowned
41-year-old money manager, was chosen to YRC's board by the Teamsters in the wake of a major restructuring that kept
YRC out of bankruptcy at the end of 2009. The union, which represents approximately 25,000 YRC workers, was awarded
two board seats and a chunk of heavily diluted YRC stock in return for 15-percent wage concessions and a dramatic
cut in the company's pension contributions.
Overland Park, Kan.-based YRC was allowed to suspend pension contributions from mid-2009 until the start of 2011, when
it resumed them at only one-fourth of historical levels. The company isn't expected to restore full contributions until 2015
at the earliest.
Wilson worked for Goldman, Sachs & Co. and the Blackstone Group, two of the finance industry's heavyweights, and was
then named partner at private equity firm Silver Point Capital before retiring at 36. He served on President Barack Obama's
auto industry crisis task force and played a key role in the restructuring of General Motors Corp. after the automaker's
mid-2009 bankruptcy filing.
The number of container ships waiting outside U.S. East and Gulf Coast ports has swelled from just three vessels on Sunday to 54 on Thursday as a dockworker strike has swiftly halted bustling container traffic at some of the nation’s business facilities, according to analysis by Everstream Analytics.
As of Thursday morning, the two ports with the biggest traffic jams are Savannah (15 ships) and New York (14), followed by single-digit numbers at Mobile, Charleston, Houston, Philadelphia, Norfolk, Baltimore, and Miami, Everstream said.
The impact of that clogged flow of goods will depend on how long the strike lasts, analysts with Moody’s said. The firm’s Moody’s Analytics division estimates the strike will cause a daily hit to the U.S. economy of at least $500 million in the coming days. But that impact will jump to $2 billion per day if the strike persists for several weeks.
The immediate cost of the strike can be seen in rising surcharges and rerouting delays, which can be absorbed by most enterprise-scale companies but hit small and medium-sized businesses particularly hard, a report from Container xChange says.
“The timing of this strike is especially challenging as we are in our traditional peak season. While many pulled forward shipments earlier this year to mitigate risks, stockpiled inventories will only cushion businesses for so long. If the strike continues for an extended period, we could see significant strain on container availability and shipping schedules,” Christian Roeloffs, cofounder and CEO of Container xChange, said in a release.
“For small and medium-sized container traders, this could result in skyrocketing logistics costs and delays, making it harder to secure containers. The longer the disruption lasts, the more difficult it will be for these businesses to keep pace with market demands,” Roeloffs said.
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.