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.
The forbearance of YRC Worldwide Inc.'s unionized workforce is about to be tested again.
Tomorrow in Dallas, YRC executives will brief leaders of the Teamsters Union representing about 25,000 YRC
employees. The meeting will cover the Overland Park, Kan.-based company's recent performance, its future prospects,
and the need to prepare for the first of a round of debt obligations set to come due in 2014, the company said
in a brief statement last week.
James L. Welch, the less-than-truckload (LTL) carrier's CEO, essentially outlined the meeting's agenda in a letter
sent to employees Oct. 30. Servicing YRC's $1.4 billion debt load leaves the company with no money to reinvest in the
business once wages, benefits, and regular operating expenses are paid, Welch said in the letter. YRC's lenders have
told the company they will not agree to refinance its debt without, among other things, a new labor agreement that
extends beyond the current compact's March 2015 expiration date. YRC's operational performance also needs to improve
for its lenders to consent to a debt restructuring, Welch said.
This would hardly be the first time YRC has gone to the workers' well. Both sides agreed to three extraordinary
concessions
during 2009 and 2010.
The last round, in September 2010, extended the then-current contract for two years
beyond March 2013, cut workers wages by 15 percent (after annual hourly increases in the 40- to 45-cent range), and
allowed the company to resume in mid-2011 previously frozen pension contributions but at only one-fourth the level
in effect before the freeze.
The agreements sparked a lawsuit from unionized rival ABF Freight System Inc., which
argued that they violated the National Master Freight Agreement, the pact that has traditionally governed labor
relations in the trucking industry, by not being extended to all member companies.
Welch's latest call for sacrifice is unlikely to sit well with Teamster leadership. General President James P. Hoffa,
who will not attend tomorrow's meeting, would "rather get his wisdom teeth taken out" than agree to further concessions,
said a source familiar with the situation.
As YRC was spiraling downward towards bankruptcy in 2009,
Hoffa worked both publicly and behind the scenes to keep the company afloat. He urged the rank-and-file to accept painful
concessions and personally lobbied for a controversial debt-for-equity swap in late December
that effectively saved YRC but resulted in existing common stock holders being virtually wiped out.
Most of YRC's problems can be laid at the feet of YRC Freight, the company's long-haul unit. The result of a disastrous
integration of Yellow Freight System and Roadway Express following Yellow's 2003 purchase of Roadway, YRC Freight had been
bleeding red ink for years, offsetting the otherwise stellar performance of the company's three U.S. regional subsidiaries.
Jeffrey A. Rogers, appointed by Welch in 2011 to run YRC Freight, seemed to be making progress on a variety of metrics. Then
after a subpar second quarter attributed to the bumpiness of a big network integration,
Welch fired Rogers in September and took personal control of the unit. Company sources said Welch had grown increasingly unhappy with the division's performance.
Since reaching an all-time high in 2005, YRC stock has lost nearly all its value. It has engineered two reverse stock splits
in the past three years in the hope that the moves would boost the company's equity value by reducing the number of outstanding
shares. YRC stock is up more than 23 percent so far this year but has been on a steep decline since it hit a yearly high in early
July of above $35 a share. As of midmorning trading today, YRC shares changed hands at $8.51 a share.
ABF DEAL
Tomorrow's meeting, which had not been on the annual calendar, comes less than a week after
the Teamsters ratified a five-year collective bargaining agreement with ABF. The compact, which calls for a 7-percent
wage reduction that will be recouped over the contract's life, will yield between $55 million and $65 million in net
savings for Fort Smith, Ark.-based ABF, which has the highest cost structure in the LTL industry. That will not only
narrow the cost gap between the rivals, but it will likely give ABF the flexibility to pursue business, perhaps some
of that being YRC's, that it had to pass on because its old cost structure wouldn't support it. The new contract took
effect over the weekend.
Though not publicly mentioned as an agenda item by YRC, it seems doubtful the hours will pass without the impact of the A
BF-Teamster contract being discussed. That will add another log to the pile of challenges facing Welch. As the source remarked,
"there seems to be no end to [YRC's] problems."
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.