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.
A tentative contract between less-than-truckload (LTL) provider ABF Freight System Inc. and the
Teamsters Union, unanimously approved late yesterday by leaders of Teamster locals, would for the
first time allow ABF to subcontract driver work, according to language in the agreement.
The tentative compact also calls for an immediate 7-percent wage reduction, which would be recouped
in increments over the life of the contract. The agreement freezes ABF's pension contributions to funds
that represent workers in the central and western United States. It affords the company flexibility on
work rules by expanding functions that could be handled across job classifications. It also eliminates
one week of workers' vacation.
In return, all current union health and welfare benefits will be maintained. In addition, workers would
get an undefined profit-sharing bonus if ABF's operating ratio—the ratio of expenses to revenues—hits 96
or better. ABF's first quarter revenues totaled more than $407 million while its expenses were nearly $429 million.
This means its operating ratio was over 100 for the quarter.
The tentative contract now goes to ABF's 7,500 unionized rank-and-file workers for a final vote. Ballots will be
mailed by June 3, with the tally set for June 27.
Teamster officials said they held the line on health and welfare benefit concessions, which were the members' top
priority. The union had harsh words for ABF's purported negotiating tactics, saying management sought to force a
contract on the workers that would "allow it to operate as a nonunion company." The union said ABF made numerous
demands during the talks that were "unreasonable" and "anti-worker."
ABF, the largest unit of Fort Smith, Ark.-based Arkansas Best Corp., said it needed labor savings to operate more
competitively with rivals, most of whom are nonunion, and with unionized carrier YRC Worldwide Inc., itself the beneficiary
of significant wage and benefit concessions agreed to by its members four years ago.
Kathy Fieweger, an Arkansas Best spokeswoman, said the language in the tentative contract mandates that no current drivers can be laid off due to the company's outsourcing efforts.
Arkansas Best has lost a combined $265 million in the past four years. The company blames much of the losses on its labor costs, which are the highest in the LTL industry. ABF workers will remain the industry's highest-paid under the proposed agreement, according to Arkansas Best.
David G. Ross, transportation analyst at Baltimore-based firm Stifel, Nicolaus & Co., said in a research note today that the
rank-and-file will likely approve the contract. "Parts of the deal will likely disagree with some of the members, but at the end
of the day, it'll be difficult for them to find a better alternative in the marketplace, even with the concessions in place," Ross
wrote.
Ross said the rest of the LTL industry should not be affected one way or the other by the new contract, noting that ABF isn't
trying to undercut the market but instead is seeking to move closer to industry-average profit margins. "If anything, these
changes should help ABF to remain rational on pricing," he wrote.
Today's action by the Teamster locals comes as Arkansas Best told employees that failure to ratify the agreement could pave
the way for a purchase by rival YRC Worldwide Inc. and could spell a "very uncertain" future for the company and its workers.
CEOs of YRC and Arkansas Best met in late March to discuss an informal offer by YRC to buy Arkansas Best. Arkansas Best rebuffed
the offer in early April, and the companies have not talked since then.
In an internal memo, the date of which is unknown, Arkansas Best said YRC's buyout overtures were "serious and not some sort
of 'scare tactic'—we have no ability to control what YRC and its board of directors will or won't do in the future regarding our
company."
In a message aimed at the union workers, the company said that "if you vote yes and ratify the agreement...then ABF can
continue on with our own plan to improve profitability, take back market share, [and] grow and protect your jobs and retirement
benefits."
By contrast, a contract rejection means the "likelihood that YRC would be able to consummate a deal grows higher," the
memo said.
The memo said Arkansas Best is in a financially "weak position" to fend off YRC's advances. No company executive or group of
executives holds enough outstanding shares to thwart a takeover bid, with the board and management combined owning only between
4.5 percent and 10 percent of the company's shares, according to the memo.
Kathy Fieweger, an ABF spokeswoman, said the document was designed to help managers respond to employees' questions and
concerns about YRC's strategy, given that company's own financial difficulties over the past four to five years.
Separately, YRC said today that its YRC Freight long-haul unit has implemented a network restructuring calling for it to
close breakbulk terminals in Cincinnati; St. Louis; and Memphis, Tenn., and consolidate a number of "end-of-line" terminals
used as freight pickup and final delivery points.
The move would save YRC Freight about $30 million a year by improving linehaul density, eliminating unproductive "empty miles,"
and reducing freight "touches" that slow transit times, increase labor costs, and increase the risk of shipment damage, the
company said.
The restructuring would lead to the loss of 760 dock, shop, office, and cartage jobs and an additional 452 over-the-road
driver positions at the affected terminal locations. At the same time, 343 over-the-road driver jobs would be created, along
with 639 cartage positions. All told, the restructuring is expected to result in a net loss of 230 jobs.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The U.S. manufacturing sector has become an engine of new job creation over the past four years, thanks to a combination of federal incentives and mega-trends like nearshoring and the clean energy boom, according to the industrial real estate firm Savills.
While those manufacturing announcements have softened slightly from their 2022 high point, they remain historically elevated. And the sector’s growth outlook remains strong, regardless of the results of the November U.S. presidential election, the company said in its September “Savills Manufacturing Report.”
From 2021 to 2024, over 995,000 new U.S. manufacturing jobs were announced, with two thirds in advanced sectors like electric vehicles (EVs) and batteries, semiconductors, clean energy, and biomanufacturing. After peaking at 350,000 news jobs in 2022, the growth pace has slowed, with 2024 expected to see just over half that number.
But the ingredients are in place to sustain the hot temperature of American manufacturing expansion in 2025 and beyond, the company said. According to Savills, that’s because the U.S. manufacturing revival is fueled by $910 billion in federal incentives—including the Inflation Reduction Act, CHIPS and Science Act, and Infrastructure Investment and Jobs Act—much of which has not yet been spent. Domestic production is also expected to be boosted by new tariffs, including a planned rise in semiconductor tariffs to 50% in 2025 and an increase in tariffs on Chinese EVs from 25% to 100%.
Certain geographical regions will see greater manufacturing growth than others, since just eight states account for 47% of new manufacturing jobs and over 6.3 billion square feet of industrial space, with 197 million more square feet under development. They are: Arizona, Georgia, Michigan, Ohio, North Carolina, South Carolina, Texas, and Tennessee.
Across the border, Mexico’s manufacturing sector has also seen “revolutionary” growth driven by nearshoring strategies targeting U.S. markets and offering lower-cost labor, with a workforce that is now even cheaper than in China. Over the past four years, that country has launched 27 new plants, each creating over 500 jobs. Unlike the U.S. focus on tech manufacturing, Mexico focuses on traditional sectors such as automative parts, appliances, and consumer goods.
Looking at the future, the U.S. manufacturing sector’s growth outlook remains strong, regardless of the results of November’s presidential election, Savills said. That’s because both candidates favor protectionist trade policies, and since significant change to federal incentives would require a single party to control both the legislative and executive branches. Rather than relying on changes in political leadership, future growth of U.S. manufacturing now hinges on finding affordable, reliable power amid increasing competition between manufacturing sites and data centers, Savills 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.