TFI may seek a different approach for upcoming Teamsters talks

The TFI International boss has taken what appears to be a new approach to next year’s contract negotiations with the Teamsters union, and it may not sit well with the Teamsters’ management.

Alain Bédard, chairman of the board, president and chief executive officer of the Montreal transportation giant, hinted Friday that he wanted to dispense with a nationally uniform wage structure for workers at LTL carrier TForce Freight, l former UPS Freight that TFI (NASDAQ: TFII) acquired from UPS Inc. (NYSE: UPS) in January 2021 for $800 million in cash. In its place, there could be a contract that sets wages based on worker geography.

The upcoming talks “will be a major shift for us as we now involve our operational staff in the next discussion” with the Teamsters, Bedard told analysts after the company’s first quarter results were released Thursday.

Bédard said he doesn’t want lawyers involved in the negotiations. “We want operational guys” at the negotiating table, he said.

TFI’s acquisition of UPS Freight, completed almost a year ago, brought approximately 14,000 UPS Freight employees, including 11,500 Teamster members, into the TFI fold. The current five-year contract expires on July 31, 2023.

The Teamsters don’t generally negotiate contracts based on geographic concerns. While UPS’s main or primary contract covering more than 300,000 small package workers includes additional contracts that are negotiated regionally, there is virtually no pay variation based on worker geography, said Ken Paff, head of the national Teamsters organization for a Democratic Union, a splinter group from the Teamsters.

“I don’t see the [Teamsters] accept different salaries in different areas at all levels,” Paff said in an email Friday.

The Teamsters did not respond to requests for comment.

Bedard’s comments came as TFI reported strong first-quarter results. Adjusted diluted earnings per share came in at $1.68, well above consensus estimates of $1.30 per share. Operating profit more than doubled year-over-year to $219.8 million. Revenue, including nearly $300 million from fuel surcharges, nearly doubled to $2.2 billion. The LTL segment generated $835.4 million in revenue and $94.8 million in operating profit.

TFI entered 2022 in the best shape in its history, Bedard told analysts.

Shares fell 3.6% amid a massive drop in US stock prices. TFI shares have been on a rollercoaster ride since the start of the year. The shares were hit by three separate sell-offs; the most recent and severe sent the stock price crashing to $80.44 per share from around $111 per share five weeks ago.

Bascome Majors, analyst for Susquehanna Investment Group, said the recent declines present a compelling buying opportunity. TFI “remains attractively priced for what it is: a high-quality, diversified North American transportation company. But more importantly, the shares are very cheap for what they could be, as capital allocation is expected to be deeply accretive over time as M&A opportunities and the value of TFI’s own shares present in a potential freight recession.

Majors has a 12-month target price of $112 per share.

FREIGHTWAVES’ Top 500 For-Hire Carriers list includes UPS (#2).

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