Negotiations with the Trucking Teamsters starts Dec. 18th. ABFS is negotiating independently this time. Union management seems to understand the uncompetitive nature the union has created versus non-union LTL truckers. I am not sure the rank and file understands their union may be a thing of the past without changes. Non-union LTL trucking has continued to have big market share gains from union truckers. The pension burden on the remaining union trucking companies is unsustainable at 4 recepients to 1 current payer. I believe the union and ABFS will be able to work a deal that will benefit both sides and the stock price will increase nicely. Tangible book value is above 12. Company stock is under accumulation. The logistics company purchase will benefit ABFS.
Here are some interesting facts I have been digging up. From 1990 until 2009 union tonnage market share has been reduced from 51% to 27%. YRC's market share has eroded from 41.4% in 1990 to 11.5% in early 2011. Meanwhile, FED EX which is now the largest LTL carrier has increased market share by 58% from 2006-2010. The number of trucking companies that no longer exist is very long. I hope ABFS and the Teamsters can make an agreement which will allow ABFS to survive in a very competitive business.
Type LTL trucking market share into your browser and you will get more information than you will probably want. You can also go to sec.gov and read the different trucking company 10Q and 10K filings. You will notice that YRCW has lost significant market share and so has ABFS. It is unfortunate that ABFS was not in a position to take advantage of the YRCW debacle. Most of this union business has gone to non union trucking firms. Fed Ex has been the biggest beneficiary of union woes. Because of the loss of business, ABFS now has too much terminal capacity and is inefficient. They have two choices...figure out how to increase business or cut help and terminals. You can't increase business if your pricing is not competitive with your competition and your not as effective and efficient as the non union carriers. If I were union and working in the trucking industry, I would be asking how can we provide better costs and results than the non union trucking companies that are destroying union jobs. My guess is that ABFS is hoping through negotiations with the teamsters that they can become competitive again. (Because of union concessions made to YRCW, ABFS isn't even competitive with them.) If not, ABFS has no choice but to make internal cuts because the business is not going to come back. I believe that rational people with the facts presented from labor and business will make a decision that can be beneficial to both parties. Therefore, I think ABFS is a buy at levels below tangible book value and can return a good profit over the next 3-6 months after an agreement is made.