FORT SMITH - ABF Freight System Inc.’s tentative contract with the Teamsters - if approved by union members - “would allow us to restore the profitability of our company and allow our employees to have the best paying jobs in the industry,” parent company Arkansas Best Corp. chief executive Judy McReynolds said Tuesday.
The contract, which includes a 7 percent initial wage cut, has raised hopes for the Fort Smith-based trucking company that has highest-in-the-industry labor costs.
“We look forward to this agreement being voted on by employees,” said McReynolds, Arkansas Best’s president and chief executive officer. ABF, Arkansas Best’s largest subsidiary, employs about 7,500 drivers and other employees who are Teamsters members.
Arkansas Best reported a net loss of $7.7 million for 2012 and $13.4 million in this year’s first quarter.
Representatives from 160 local chapters of the International Brotherhood of Teamsters reviewed and unanimously endorsed the tentative contract Monday, the union reported. Members are expected to vote in June.
A Teamster website posting Tuesday pointed to 17 areas of negotiation where the union “successfully defeated ABF’s proposals,” including major cuts to health, welfare and pension benefits.
In addition to the contract negotiations, other recent efforts have boosted Arkansas Best in the past year, McReynolds told the group.
Revenue hit $2.1 billion in 2012, a record for the 90-yearold company.
Among other key developments, she said:
Purchase of Panther Expedited Services in 2012 and ongoing expansion of truck brokerage, global supply, household moving and roadside truck services have made ABC more competitive in the wider freight transportation market. The company in the past had focused on competing for $35 billion in business in the less-than-truckload segment, which hauls more than one customer’s goods in the same trailer. Today, the company is competing for a wider range of freight transportation services that make up a $200 billion market.
A 2012 operating loss for ABF Freight System “was troubling and unacceptable. It is directly associated with ABF’s industryhigh cost structure and lack of operational flexibility,” according to McReynolds’ presentation. ABF Freight reported a loss for last year of $19.4 million, according to a company filingwith the federal Securities and Exchange Commission.
Demand in the less-thantruckload freight transportation currently outpaces supply, she said. That trend started in early 2011, according to McReynolds’ presentation.Fleet sizes outstripped demand for the previous five years, starting in early 2006.
At least one analyst report issued Tuesday agreed that the union contract is key.
“Results for Arkansas Best hinge upon the agreement in question, in our view, given the company’s highest-in-the-industry labor cost structure,” according to an analysis by David Ross and Bruce Chan of Stifel Financial Corp., a St. Louis-based brokerage and investment firm that does business with companies in its reports.
“We have declined to bake in the effect of the new agreement just yet, as we await final ratification…” the analysts’ notes said.
Stock for Arkansas Best Corp. closed Tuesday at $18.67 per share, up 93 cents or 5.24 percent. The day’s range included a 52-week high of $19.21 per share. During the past year, the stock has traded at a low of $6.43. Arkansas Best is ranked the 13th largest freight carrier in the nation.
Business, Pages 25 on 05/22/2013