USF Closes Its Red Star Company

According to Morgan Stanley, Red Star accounted for 10% of the Corporation’s total revenue in 2003, with a $9 million operating loss. The announced reason for the LTL carrier shutdown was “the unexpected and unilateral job action initiated on Friday [May 21] by the International Brotherhood of Teamsters that triggered a loss of customers and revenue to a point where Red Star would never be able to recover from the business losses caused by this Teamster job action.” USF is a $2.3 billion supplier with four other divisions, USF Dugan, USF Reddaway, USF Bestway and USF Holland. The Teamsters had targeted USF Dugan and Bestway for organizing and had three successes in April with USF Dugan truck drivers at Mobile, Cincinnati and Memphis. In each instance, workers at terminals in such additional locations as Nashville and Little Rock had filed petitions with the National Labor Relations Board (NLRB) for elections. On May 21, USF Red Star workers at the carrier’s Philadelphia terminal walked out in a bid to win Union recognition without going through the NLRB election process. Red Star had an estimated 1500 drivers and dockworkers who are members of the Teamsters to picket all of the carrier’s terminals, shutting down the company’s operations.

In shutting down Red Star, USF Corp. chairman, president and CEO, Richard P. DiStasio, said, “In this economic environment, where just-in-time inventory is the norm not the exception, any irregularity in transportation services puts all Red Star customers at risk. As a result we have lost customers and revenues; realistically, we know man of those customers are gone.”

Morgan Stanley notes that. “USFC will not only lose the revenue from loads originating in the Northeast but also loads originated in other parts of its system destined to the Northeast. There is a risk that some large customers who use USFC’s regional service in multiple regions will have to consider using a different carrier if USFC can’t offer service to the Northeast.”

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