Not Your Grandfather’s Freight Company

XPO is a Fortune 500 company that exceeded $15 billion in revenue in 2017 and employs 98,000 workers at over 1,500 locations worldwide. Its North American headquarters is located in Greenwich, Connecticut and European headquarters is in Lyon, France. XPO has 50,000 customers in 32 countries. This is not your grandfather’s local freight company.

The freight industry is not the sexiest of subjects to write about. Too much of the time it conjures up an old, out-of-date image of a declining industry. It’s even a misnomer to classify XPO a “freight” company. The logistics revolution during the last forty years reached deep into the arcane world of freight long ago and transformed it. Like logistics industry leaders such as UPS, FedEx, Amazon, or Walmart, XPO manages whole supply chains of its major customers.

XPO is a relatively young company founded in 1989 by Michael Walsh and Keith Avery as Express-1 Expedited Solutions. Walsh claimed that the company started out with two trucks and by 2004 it had revenues of over $20 million. When Bradley Jacobs bought in it in 2011, he had big plans:

I plan to build a multibillion-dollar transportation brokerage business over the next several years. Express-1 is an ideal platform, with prominent positions in expedited services, freight brokerage and freight forwarding. We aren’t a trucking company. We don’t own trucks. We’re a brokerage firm.

Jacobs cut his teeth in the waste management and equipment rental business before he went into freight. The Great Recession led to the biggest crisis in the freight industry in thirty years. But it also created opportunities for new competitors, like XPO, which grew by leaps and bounds. After renaming the company XPO, Jacobs bought seventeen companies between September 2011 and October 2015. His ambitions were also global. In June 2015, he purchased the French-based transport company Norbert Dentressangle (ND) giving XPO access to a European-wide road and warehousing network.

Most freight company executives in the past were little known outside their cloistered industry. Teamsters leaders of the past, like Hoffa Sr, Jackie Presser, or Ron Carey were more recognizable to the public than the heads of freight companies. Jacobs, however, appears frequently on Mad Money to tout his innovations and boast how they’ve built XPO into an industry leader. His growing public image is matched by his ballooning personal worth, now at $2.7 billion.

In October 2015, XPO purchased the US-based nonunion Con-Way. Con-Way was formerly called Consolidated Freightways (CF), and was the second-largest less-than-truckload freight operation in the United States. It also used to be Teamster-organized.

Bradley Jacobs’s purchase of Norbert and Con-Way morphed XPO from an “asset-light” freight brokerage firm to a full-scale logistics operation with a large network of warehouses and trucks in North America and Europe. A quick look at its website reveals the vast logistics operation that it has become. It was during this transition that many XPO drivers began approaching the Teamsters about representing them after the new owners reneged on promised wages increases and cut benefits.

Whither the Teamsters

Freight was once the foundation of the Teamsters. The post-WWII expansion of the freight industry was greatly subsidized by the construction of the massive federal highway system. The New Deal era regulation of the industry was also a boon to the Teamsters which peaked at nearly two million members by 1976. The National Master Freight Agreement (NMFA) covering nearly four hundred thousand drivers and warehouse workers across the country made the Teamsters the most powerful union in the United States. It was the crowning achievement of the Mafia-allied Jimmy Hoffa, the infamous leader of the Teamsters, before he went to prison in 1967.

The situation dramatically changed in the late 1970s. The big political leaders and employers of the era were determined to push back the union’s strength, and one major weapon in their arsenal was deregulation. The Teamsters were specifically targeted. Carter’s inflation “czar” Alfred Kahn, a self-described “good liberal democrat” and the former chairman of the Department of Economics at Cornell University, wrote, “I’d love the Teamsters to be worse off. I’d love the automobile workers to be worse off. I want to eliminate a situation in which certain protected workers in industries insulated from competition can increase their wages much more rapidly than the average.”

Kahn got what he wanted, though he later expressed some regrets. The gut-wrenching changes in the wake of deregulation wrecked the Teamsters, costing hundreds of thousands of members and massive decline in wages, benefits, and working conditions. The title of trucking industry analyst Michael Belzer’s 1999 book  A Sweatshop on Wheels aptly summed up the state of the freight industry.

Despite the pledge of Teamster general president James P. Hoffa to restore “Teamster Power” in freight, the union’s strength continued to decline on his watch. The venerable Consolidated Freightways, once one of the largest Teamster employers in the country, started in 1996 to move operations from its unionized wing to nonunion Con-Way, an industry practice known as “double-breasting.”

On Labor Day in 2002, CF declared bankruptcy and closed its doors forever. CF CEO John Brincko told its workers in a telephone message:

Thank you for dialing in on this holiday weekend,” he said. “I hope you and your family are enjoying the time together. I have some extremely urgent and sad news to share with you today . . . Your employment ends immediately.

The Teamsters did nothing. This may have been one of the great low points in the Teamsters’ history. But soon afterwards another disaster struck; this time wholly of Hoffa’s doing.

In October 2002, the Teamsters called off a three year, incompetently run nationwide strike against Overnite Transportation, one of the most vicious anti-union employers in the freight industry. The goal was union recognition. The Overnite fiasco was vividly captured in the documentary American Standoff. It appeared that Teamsters were destined to remain on the margins of the freight industry.

The decline of the Teamsters in warehousing has coincided with both a vast expansion of the warehouse workforce across the country and radical changes in the composition of its workforce. Retail — once a major source of employment for black women — has been in rapid decline over the last decade. It has been replaced by warehouse work, which is organized in massive “clusters.” According to labor journalist Kim Moody:

These clusters are based around large metropolitan areas and all draw on what you might call the “reserve army of labor” — mostly workers of color who came into these warehouses in the last ten to fifteen years.

It’s no accident that Tasha Murrell found employment in one of XPO’s ten warehouses in Memphis, a city that has been made into one of the most important logistics centers in the world by FedEx, whose “Superhub” is located there.

The influx of larger numbers of women into these traditionally male-dominated jobs has meant pregnancy discrimination has become a major workplace issue. In October 2015, Peggy Young’s lawsuit against United Parcel Service (UPS), the logistics giant and the largest private-sector unionized employer in the United States, for pregnancy discrimination led to the company offering light duty to pregnant workers. However, pregnancy discrimination in warehouses across the country remains rampant, including at Walmart.

While it’s possible that federal law against pregnancy discrimination might be strengthened in the near future, it isn’t a substitute for workplace power. The Teamsters win/loss record at XPO, however, is not encouraging. In 2016, the Teamsters former freight director Tyson Johnson announced, “The race is on. We intend to organize XPO and Con-Way bumper to bumper.” The promised bumper to bumper never materialized and is probably a better example of Teamster bluster.

The union’s approach has been local and scattershot at XPO, and when local representation elections have been won, none have progressed towards winning a contract. Tom Leedham, the retired principal officer of Teamsters Local 206 in Portland, Oregon and the former warehousing director under Ron Carey said:

The Teamsters’ thinking is obsolete. No local union has the staff, resources, or experience to defeat XPO. It has to be a national campaign. Much of the pioneering warehouse organizing begun under Ron Carey was dismantled when Hoffa took over, and has never gotten back on track.

Despite the frustrating organizing record, XPO drivers continue to take to social media to push the case for union representation. Meanwhile, Bradley Jacobs has promised improvements in the working conditions at XPO in a letter to Congress. Tasha Murrell is not convinced.

For the sake of the women that still work at XPO, I am hopeful that the company will adhere to its new pregnancy accommodation policy, but XPO’s track record doesn’t make be believe they will. However, the miscarriages are just one of the many issues that need to be addressed at XPO to ensure workers are treated with the respect they deserve.