Equipment and other rent expense increased 14% or $12 million, due to implementation of work stoppage contingency plans in the fourth quar- ter and higher ocean freight expense related to a large volume of business gained from a competitor in Puerto Rico. Other costs increased $11 million from higher spending on security and travel and lodging. On the positive side, material and supplies expense decreased slightly.
A Teamster campaign to organize all Overnite employees culminated in the union calling for a nationwide walk- out on October 24. The job action, which continued into 2000, was ignored by 94% of Overnite employ- ees. The union is the certified and recognized bargaining agent for about 1,800 Overnite drivers and freight handlers out of a 13,000 employee workforce. More than 60% of Teamster-represented employees have worked through the walkout. Employees at half of the 22 Teamster- represented service centers have peti-
On-Time Service Performance
tioned the National Labor Relations Board to decertify the Teamsters as their bargaining agent.
Despite the walkout, all locations continue to be served and on-time service levels continue to improve. The Company is currently engaged in negotiations with the Teamsters, but has not entered into any bargaining agreements.
DELIVERING VALUE IN TRANSPORTATION
Over the past several years, Overnite has expanded its efforts to improve the quality of its customer service and to focus on higher-margin busi- ness segments. The outcome of these efforts is a series of innovative new transportation products that better meet the demands of customers for simpler, faster and more reliable service. As evidence of Overnite’s success, on-time performance reached a record 98% in the first quarter of 2000. Some of the new or expanded services include:
Overnite Advantage: Overnite’s everyday service reliability, while providing nationwide coverage to over 45,000 points including 100% direct full-state coverage in 27 states, more than 15,000 one- and two-day lanes and three- and four-day transcontinental sleeper service.
Overnite Advantage Guaranteed: This service product is intended for time-sensitive shipments. Overnite Advantage Guaranteed service will guarantee delivery based on Overnite’s published transit time. It’s on-time or it’s free.
Overnite Advantage Expedited: This service is for customers needing guaranteed service for their emer- gency, time-critical shipments to any point in the world through a single transportation provider. Overnite provides a team of freight specialists to handle coordination and instanta- neous tracking for all segments of the move, from origin to destination. It’s on-time or it’s free.
Special Services Division: Overnite’s dedicated truckload service division utilizes Overnite’s LTL expertise to expand into niche segments of the growing truckload market.
Assembly & Distribution: A special logistical function for shippers who need consolidation and distribution services. Overnite’s Assembly and Distribution service provides these functions for their customers by leveraging the broad distribution capabilities of the Overnite network.
Cross Borders and Ocean: A single carrier contact that provides trans- portation services to Alaska, Hawaii, Guam, Canada, Puerto Rico and the U.S. Virgin Islands, with competitive transit times and price.
(millions of dollars)