ABF’s new labor deal calls for $6.50 hourly wage increase by 2027

ABF Freight System provided the details of a recently inked tentative agreement with its union workforce Thursday after the market closed.

The new labor deal, if ratified, would provide employees with wage increases, a step up in health and welfare contributions, additional sick time, one more paid holiday and a revised profit-sharing program. The new five-year collective-bargaining agreement with the International Brotherhood of Teamsters would become effective when the current deal ends on June 30.

Hourly wages will increase by a total of $6.50 over the five-year term, with benefits contributions increasing by $4.46 per hour over the same period. The last labor deal between the two parties increased hourly wages by $2 an hour over five years.

A news release from Teamsters said the deal has been unanimously approved by union leaders. A vote of ABF’s Teamster employees will be held over the next two weeks.

“ABF’s goal throughout the negotiation process has been to reach a fair agreement that pays market-based wages and benefits and allows employees to continue sharing in ABF’s success while enabling ABF to grow and make necessary investments in the business,” a filing with the Securities and Exchange Commission read.

ABF Freight is the less-than-truckload subsidiary of transportation and logistics provider ArcBest (NASDAQ: ARCB).

The details include:

• A $3.50 hourly wage increase (plus 8.75 cents per mile) for all regular employees starting July 1.
• A 75 cent increase (plus 1.875 cents per mile) in each of the following four years of the deal.
• Cost-of-living increases.
• New hire pay will equal 90% of the top pay rate on the first day of employment and 100% after the first year of employment.
• Newly hired non-CDL employees will start at 70% of the top rate on day one, progressing to 100% after five years of employment.
• The pay rate tops out at 100% after four years for current non-CDL employees.
• The profit-sharing scale was updated to start at a 1% payout for an operating ratio of 93% or better (prior requirement was a 96% OR), with a new top tier payout of 4% for an 87% or better OR (prior top tier was 3% with a 93% or better OR).
• Contributions will continue to the same health and welfare and pension funds at current rates. In addition, there will be an 83 cent increase split between the funds in the first year, with the increases stepping 63 cents, 80 cents, 99 cents and $1.21 higher, respectively, from years 2024 through 2027.
• Martin Luther King Jr. Day is now an additional paid holiday.
• Qualifying employees receive two additional paid sick days.
• The creation of a new non-CDL, box truck position, allowing the union to recapture work that normally is handled by contractors and third parties (per an internal Teamsters bulletin).

The notice from Teamsters said the deal also prohibits what it calls “invasive technology,” like inward-facing cameras and audio recorders, and prohibits the use of autonomous vehicles. The union said it also stopped a proposed increase in the use of purchased transportation and a points system for attendance among other items.

“With this new agreement, we have reset the standard and charted a new course for the entire freight industry,” said Sean O’Brien, Teamsters general president. “The gains made at the table are a testament to our strength and commitment to revamp and rebuild the Freight Division.”

The Teamsters union is currently negotiating labor contracts with UPS (NYSE: UPS), Yellow Corp. (NASDAQ: YELL) and TForce Freight (NYSE: TFII).

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Editor: Todd Maiden