Trucking (Market Weight): We spoke with a small retailer on the East coast about volume and LTL and TL pricing trends. This shipper’s volumes are trending up about 1% y/y during 4Q, which is roughly flat sequentially from 3Q and compares to 3%-3.5% y/y growth earlier this year during the seasonally strongest first quarter. Our contact noted that capacity for both LTL and TL remains extremely abundant, and over the last few months in particular he has received more incoming calls from carriers trying to do business than ever before. Eighty percent of this shipper’s freight is moved on LTL, of which SAIA accounts for about 50% of his LTL spend and our contact has been happy with both the service and rates he has received. Back in January 2009, our contact bid his LTL freight and received a 5% reduction versus 2008, and has recently put out an LTL bid package for 2010 and is seeing bids come in roughly 2% lower versus 2009 into continued apparent price competition for LTL freight. However, in the event YRCW were to file for bankruptcy, this shipper anticipates rates on freight not under contract will increase roughly 8%-10% immediately. On the TL side, this shipper received a similar 5% y/y rate reduction earlier in 2009, but unlike with LTL, our contact expects TL rates will be flat to slightly positive in 2010.
Airfreight & Logistics (Market Underweight): We spoke with lead counsel Lynn Faris of Leonard Carder, LLP regarding a class action settlement in LaBrie vs. UPS Supply Chain Solutions (SCS). Ms. Faris (and her firm) is also the lead plaintiff’s attorney in the multi-district litigation in Indiana in the FedEx Ground Contractor case and was the winning attorney in the Estrada case in 2007 against FedEx Ground. Last Friday, a judge approved a preliminary $12.8M settlement payment by UPS involving the misclassification of some 660 delivery drivers as independent contractors. The plaintiff team used in their pleadings the 2007 precedent set in Estrada vs. FedEx Ground in which a Judge ruled that Single Work Area (SWA) drivers were in fact employees and not independent contractors and thus were entitled to back pay and expense reimbursement. Similar to the contractors in Estrada, the drivers at UPS SCS generally drove for themselves and did not have other drivers working for them and were also awarded overtime benefits and compensation as well as expense reimbursement for those drivers in CA as is the state law. While the settlement neither sets precedent or admits wrongdoing by UPS (unavailable for comment), it follows a pattern that both UPS and FDX seemingly would rather settle cases than risk an adverse ruling that could be used against them in the future. Unlike FDX which is facing a potential plaintiff class of about 25,000 current and former workers, UPS Supply Chain Solutions only has the 660 delivery drivers it claims as independent contractors. None of UPS’s core parcel drivers are independent contractors, but rather are all Teamster employees.
Airfreight & Logistics (Market Underweight): We spoke with lead counsel Lynn Faris of Leonard Carder, LLP regarding a class action settlement in LaBrie vs. UPS Supply Chain Solutions (SCS). Ms. Faris (and her firm) is also the lead plaintiff’s attorney in the multi-district litigation in Indiana in the FedEx Ground Contractor case and was the winning attorney in the Estrada case in 2007 against FedEx Ground. Last Friday, a judge approved a preliminary $12.8M settlement payment by UPS involving the misclassification of some 660 delivery drivers as independent contractors. The plaintiff team used in their pleadings the 2007 precedent set in Estrada vs. FedEx Ground in which a Judge ruled that Single Work Area (SWA) drivers were in fact employees and not independent contractors and thus were entitled to back pay and expense reimbursement. Similar to the contractors in Estrada, the drivers at UPS SCS generally drove for themselves and did not have other drivers working for them and were also awarded overtime benefits and compensation as well as expense reimbursement for those drivers in CA as is the state law. While the settlement neither sets precedent or admits wrongdoing by UPS (unavailable for comment), it follows a pattern that both UPS and FDX seemingly would rather settle cases than risk an adverse ruling that could be used against them in the future. Unlike FDX which is facing a potential plaintiff class of about 25,000 current and former workers, UPS Supply Chain Solutions only has the 660 delivery drivers it claims as independent contractors. None of UPS’s core parcel drivers are independent contractors, but rather are all Teamster employees.
