Fed Ex, Con-way Battling Organizing Gains by Teamsters Union

Workers at FedEx Freight’s Philadelphia facility recently voted 28-16 in favor of representation by the Teamsters union. Also, workers at FedEx Freight’s New Brunswick, N.J., similarly voted in favor of Teamsters’ representation.

That follows a rejection of union organization weeks earlier by FedEx Freight workers in Cinnaminson, N.J., a suburb of Philadelphia.

And FedEx Freight said last week that union representation election was held on Wednesday, November 12, at the FedEx Freight service center in Newark, N.J. and a majority of city and road drivers at the Newark facility voted against union representation and in favor of continuing a direct relationship with management.

“FedEx Freight respects each employee’s right to make his or her own decision, but we prefer to work directly with employees without involving a union,” FedEx Freight said in a statement. “We believe our drivers in Cinnaminson made the right decision.

Analyst David Ross, who closely tracks the LTL industry for Stifel Nicolaus, said the inroads made by the Teamsters are minuscule compared with the size of FedEx’s operation.

With the Teamsters’ pair of organizing victories, it now has organized two of 370 service centers at FedEx Freight (representing fewer than 100 out of 36,000 workers).

“It is not a big deal, in our view.” Ross said in a note to investors.

However, Ross said, about eight more facilities (two in N.J., two in Pa. one each in N.C., Va., Tenn. and Ky. are voting soon on whether to organize with the Teamsters.

What can FedEx do from here? Ross said raising wages more significantly (like Con-way has) “does not make sense” to him. Rather, FedEx Freight “simply needs to sell its workers on why it’s best to work directly with them, rather than create the divide” with the unions.

“We believe workers can get a better deal working with FedEx (especially with the outside threat of the unions) than actually joining with the Teamsters,” Ross concluded.

The $35 billion LTL industry has far fewer jobs than the $300 billion truckload sector, but is somewhat easier for the Teamsters to organize. That’s because the TL sector is highly fragmented and largely does not have terminals, which can be more easily targeted for union representation.

“In LTL, the main difference between union and non-union companies is not worker pay, but rather, number of workers,” Ross said. “Union companies have been failing for decades. Even though YRC is still standing, it had to eliminate around 30,000 Teamster jobs just to have a chance at surviving, in our view.”

In fact, the Teamsters have lost more than 500,000 union jobs in the LTL sector since deregulation in 1980. The union has been unable to organize any sizeable trucking company (with the exception of UPS Freight, formerly Overnite Transportation) during that span.

Instead, as many as 500 unionized companies have been shuttered since 1980. They include such venerable trucking names as Admiral Merchants Motor Freight, Bender & Loudon, Brigg’s Transportation, Central Truck Lines, Chippewa Motor Freight, Cleveland, Columbus & Cincinnati Highway, Cooper-Jarrett, C.W. Transport, Eazor Express, Glendenning Motorways, Hall’s Motor Transit, Hannibal-Quincy Truck Lines, Holmes Route USA, Horn’s Motor Freight, Illinois-California, Interstate Motor Freight System, Lee Way Motor Freight, Mason & Dixon Lines, McLean Trucking, Oneida Motor Freight, Richmond Cartage, Rimes Trucking, Spector-Red Ball, Sterling Transit, T.I.M.E-D.C., Tose-Fowler, Transportation Motor Express, Tucker Freight Lines and Wilson Freight Lines.

That is not a complete list. In fact, it is only a partial listing of those unionized carriers that shut their doors during the 1980s. There are hundreds more that closed during the 1900s and after 2000. Space limits the listing of those carriers that included $3 billion Consolidated Freightways in 2002 and Guaranteed Overnite Delivery (G.O.D.) in 2004, among many others.

If able to win a contract with the union, FedEx Freight’s Philadelphia and New Brunswick workers would gain the first contract at that company. FedEx Freight is ranked No. 1 in Logistics Management’s list of LTL carriers with approximately $5.2 billion revenue last year.

The union said the Philadelphia and New Brunswick organizing effort is one of “numerous campaigns” under way at FedEx Freight.

Analyst Ross said recent FedEx Freight union votes may be challenged, as the union has been pushing to disallow dock workers at those terminals from voting in the elections. “Either way, we do not believe any significant amount of facilities will join a union, because there is little, if any, upside in it for the workers,” Ross said in a note to investors.

Predictably, top Teamsters officials saw it quite differently.

“The drivers are fed up with FedEx Freight,” Teamsters General President James P. “Jim” Hoffa said in a statement. “These workers are tired of management talking down to them at every chance, and they want decent benefits, including more affordable health insurance. They also want consistent and fair working conditions and a more hopeful future.”

Hoffa claimed “thousands” of freight workers at FedEx Freight and Con-way are turning to the Teamsters Union, which may be a bit of an exaggeration considering the relatively small size of the Philadelphia and New Brunswick units.

But any victory for the Teamsters has ramifications. The union has lost in excess of 500,000 jobs in its freight division since the Motor Carrier Act of 1980 economically deregulated the trucking industry. The Teamsters have 1.4 million members. Its largest unit is UPS, with more than 260,000 Teamsters at that company.

Teamsters’ campaigns have already paid off. At FedEx Freight, the company announced an 80-cent-per-hour raise a few days after Local 107 filed for the election at Cinnaminson. The Teamsters claim the company got rid of its overly punitive driver scorecard, which gives drivers infraction points for errors.

Also, after organizing got under way at Con-way, the company announced it would increase truck driver pay by $60 million in 2015, and other improvements.

Con-way Freight, ranked No. 2 on Logistics Management’s list with $3.6 billion in LTL revenue, recently had workers at its Laredo, Texas, facility narrowly voted in favor of the Teamsters. Union representation voting is scheduled for three Con-way facilities in California in the coming months.

The Laredo facility is the exception to Con-way’s operation. It has in excess of 425 terminals – by far the most of any LTL carrier in this country – and all are non-union, except for Laredo.

Con-way recently negotiated roughly a 6 percent pay raise for drivers at all its units, LTL and truckload. But company officials say that raise is unrelated to union organizing activity. Instead, they say, it is a reaction to the tight market for truck drivers these days.

“It seems more than mere coincidence that these two companies have announced significant pay increases just as hundreds of workers across the U.S. are approaching our local unions seeking representation,” Tyson Johnson, director of the Teamsters National Freight Division, said in a statement.