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ArcBest's CEO Targets Non-LTL Services For Half Its Revenue, Up From 31 Percent

ArcBest's CEO Targets Non-LTL Services For Half Its Revenue, Up From 31 Percent

The head of transport and logistics provider ArcBest Corp. (NASDAQ: ARCB), Judy R. McReynolds, said today that the company is pushing for half its annual revenue to be generated outside its traditional less-than-truckload (LTL) services, up from 31 percent today.

McReynolds, speaking at the Transportation & Logistics Council's annual conference in Memphis, did not specify a time frame for hitting that objective. In 2012, about 7 percent of the company's revenue came from outside its LTL subsidiary, known as ABF Freight. That year, the company, known then as Arkansas Best Corp., acquired Panther Expedited Services, an expedited transportation concern, for $180 million. From then on, it began to broaden its portfolio to de-emphasize the weighting of LTL services. Founded in 1923, ABF Freight is unionized with about 8,600 members of the Teamsters union. The other segments of its business are not. ArcBest generates about $3 billion in annual revenue.

Today, most of ArcBest's customers--it rebranded in 2014--buy more than one service from the company. LTL, McReynolds, "is a small slice of what they buy," she told the group. Based on a third-quarter 2018 investor presentation, it sees its greatest market opportunities in transportation management and in the international arena.

Last July, ABF Teamsters ratified a five-year contract that included annual wage increases, a restoration of a vacation week, and perhaps most important for members, kept workers' pension contribution levels at about $7.83 per hour, per employee. Its chief unionized rival, YRC Worldwide, Inc. (NASDAQ: YRCW), late last week agreed to a tentative contract with the Teamsters covering more than 20,000 YRC employees.

YRC's rank-and-file has yet to see the contract's language, and no details have been released. YRC Teamsters receive pension benefits equal to about $1.75 per hour, the result of a 2009 decision by the rank-and-file to absorb steep pension benefit cuts in order to save the company.

Between the higher wages afforded under the 2018 compact and the pension differential, ABF's labor costs are significantly higher than its rivals. For example, in Ohio the gap is about 20 percent, according to a source close to the situation. The differentials vary depending on the state or region because they are governed by different regional supplements and riders.

McReynolds declined comment on whether ArcBest is seeing increased activity or demand for its services as a result of any shipper uncertainty surrounding the YRC labor contract.

Image sourced from Pixabay

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Posted-In: Freight Freightwaves Logistics Supply Chain truckingNews Markets General


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