DC Velocity - November 2010

YRC, Teamster leaders agree to
contract restructuring

VPA to take over Port of Richmond

The Port of Norfolk, Va., is prepared to take over the operations of its struggling port rival in Richmond with the goal of expanding the frequency of its “marine highway” service linking the two ports, the Virginia Port Authority’s (VPA) number-two executive said.

Jeff J. Keever, senior deputy executive director of the VPA, which operates port facilities in Norfolk, Portsmouth, and Newport News, said he expects that by Jan. 1, the VPA will have entered into a lease agreement with the city of Richmond— which currently runs the port—to operate the facility.

By mid-2011, the VPA expects to add a second weekly service to ferry cargo between Norfolk and Richmond via barge, Keever said in an interview at the VPA’s headquarters in Norfolk. A round-trip service currently operates every Monday between the two ports, handling about 100 containers in each direction. Richmond and Norfolk are about 100 driving miles apart.

The overriding goal of using marine highway routes— otherwise known as “short-sea” shipping—is to remove freight from interstate highways and onto coastal waterways, thus reducing road congestion and cutting carbon emissions.

In this case, the objective is to take trucks off Interstate 64, a congested east-west highway that feeds into Interstate 95, a north-south corridor that runs through Richmond. Trailers that would normally be trucked between the two cities are diverted to barge services operating on the James River just south of Richmond.

The barge service puts trailers in close proximity to I-95 in Richmond, providing access to destinations up and down the East Coast. Currently, containerized imports entering the Port of Norfolk must be trucked nearly three hours to get to the closest north-south interstate connection.

The short-sea service “can save shippers and retailers as much as three hours in transit times,” said Joe Harris, a VPA spokesman.

Keever said he envisions Richmond evolving into an inland port in much the same way as Front Royal, also owned by the VPA and located an hour west of Washington, D.C. The Front Royal facility serves as a distribution hub for companies such as Home Depot Co., Family Dollar, Sysco Foods, and DuPont Co.

The Port of Richmond has struggled in recent years to keep and attract traffic. In 2009, it lost its largest customer, Independent Container Line, which defected to the Port of Wilmington, N.C.

The Port of Richmond’s financial situation became so dire that it had to take out a line of credit to remain in business, VPA sources say. ;

Less-than-truckload (LTL) carrier YRC Worldwide Inc. and the leadership of the Teamsters union have reached an agreement that calls for workers to make additional wage and benefit concessions in return for the company’s resuming contributions to the workers’ pension plan starting in mid-2011. The contributions had been suspended under a deal struck last year.

As part of the agreement, William D. Zollars, YRC’s chairman and CEO, will retire once the company’s restructuring is completed and a new CEO is named, according to a company press release. Zollars, 62, has run YRC since 1999. Labor sources said Zollars’ departure was a pre-condition to the union’s accepting any additional concessions.

Under the agreement, which still must be ratified by the rank and file, the current contract will be extended for two years beyond its original March 31, 2013, expiration date. Union and non-contract employees will agree to 15-percent wage cuts in 2014 and 2015; those concessions were set to expire in March 2013.

Workers would get annual hourly increases in the 40- to 45-cents-per-hour range, minus the 15-percent givebacks. The company’s health and welfare program will continue as it is currently structured.

YRC will resume pension contributions in June 2011, which is six months later than called for under the original agreement. However, YRC’s contributions would be equal to only about one-fourth of the current hourly rate, which labor sources said is about $7 an hour. That would mean that workers would receive pension contributions equivalent to about $1.75 per hour.

In a statement, YRC said the agreement is “designed to significantly improve the company’s competitive position in the marketplace.” The Teamsters took a darker view of events. “While we recognize that this plan contains wage and work rule concessions that are difficult to accept, members need to fully understand that if [the proposed agreement] is rejected, there is no doubt this company will go out of business,” Tyson Johnson, head of the union’s freight division, said in a statement announcing the proposal.

Ballots were mailed to the rank and file on Oct. 7; the tallying had yet to be completed at press time.

It is believed the agreement, if ratified, will save YRC about $350 million a year, partially offsetting the $500 million it would have cost the company to resume full pension contributions starting Jan. 1. Many observers believe that with the company struggling in a still-weak LTL freight market, it would be unable to resume full pension payouts at that time. ;