AIRBORNE EXPRESS

By: Ganymede Team Spring 2008

INTRODUCTION
      

Background Unique Approach and Current Operations Major Comparisons to Rivals Current News with Airborne Future Questions for Airborne Recommendations Airborne Today; 2008

AIRBORNES BACKGROUND
  

Airborne Express is a express mail and cargo delivery company It is the third largest after FedEx and UPS Airborne was founded as the Airborne Flower Traffic Association of California in 1946 to fly flowers to the state of Hawaii. Airborne Express developed special narrow containers which allows the use of passenger jet aircraft without needing a large cargo door modification. Its headquartered in Seattle, Washington, with its own airport hub at Wilmington, Ohio.

AIRBORNES UNIQUE APPROACH



 

Airborne Express targets the business customers that regularly ships large volume of urgent items They purposely pass over residential and infrequent shippers Airborne tailors to specific business needs Vice president, Ray Barry, said,
The customers needs we have targeted to fill are what we are best at. If we had large order customers requiring nothing but residential deliveries, we might be able to serve them as as well as we know how to . Since we cant be all things to al people, we pick our kind of customer deliberately.

AIRBORNES CURRENT OPERATIONS



Airborne has 13,300 vans, fleet of 175 aircrafts 12,700 full-time and 8,000 part-time employees fullpartAirborne owns the airport that serves as its major hub, which is unique from other express mail companies
It does not have to pay landing fees  It dos not have to tailor to other facility needs  If has to maintain the airport  And it does not share other expenses with other airlines


AIRBORNES CURRENT OPERATIONS



Airborne buys used aircrafts and modifies them



Modifies passenger doors to fit Airbornes cargo

containers  Airborne does not does not require large cargo doors to
transport cargo

Shippers and recipients were heavily populated in metropolitan areas Airborne uses independent contractors to handle 60-65% of Airbornes volume 60-

TECHNOLOGY AND MARKETING



Major software is Freight On-Line Control and OnUpdate System (FOCUS)



Allows customers to trace packages and submit shipping information



Not as advanced as its rivals

Targets major shippers via 500-person sales 500force Does not advertise in mass media

MAJOR COMPARISONS
  

 

Airborne has its own airport Airborne has unique planes Airborne targets the business customers that regularly ships in bulk Airborne tailors to specific business needs Used independent contractors for 60-65% of the 60deliveries

AIRBORNES STRENGTHS
  

Airborne has its own airport hub Airbornes planes were usually 80% full Airborne picked up and delivered more parcels per stop


Saved 30% between pick-up and drop-off costs pickdrop-

 

Airborne tailors to specific business needs Greater portion of Airbornes deliveries were afternoon and second-day deliveries second

Allowing them to use more trucks more often



This saves Airborne over 50% in delivery costs

AIRBORNES WEAKNESSES
 

Airborne does not express a lot of residential Airborne only guarantees overnight deliveries by noon the next day (rivals guarantee by 10:30am) Only 96% of Airbornes arrive on time


FedEx and UPS are 99% or higher

 

Software is not nearly has advanced as rivals Marketing is not as aggressive as rivals

AIRBORNE AND RPS?

  

Roadway Package System (RPS) is a strong ground delivery company Airborne is forming a good relationship with Roadway Package System RPS targets the large ground transport needs of largelarge-volume business customers


Putting a dent in UPSs traditional customer base

This could be setting up for a very good and strategic merge to compete better with rivals

CURRENT EVENTS
 

UPS went on strike Airborne is forming a good relationship with Roadway Package System (RPS) Airborne recently had revenues up by 29% over the last quarter UPS and FedEx turned toward distance-based distancepricing

THE FUTURE OF AIRBORNE

 

 

Is Airbornes position secure? Can it compete with UPS & Federal Express in the long-run? longIs the RPS partnership important? Should Airborne move to distance-based distancepricing? Further recommendations

AIRBORNE & THE |900-POUND GORILLAS} |900

With UPS workers on strike and Airbornes terrific financial results, its future is looking very bright. However, since UPS is such a giant in the industry, one move requires Airbornes full attention & immediate action. Should Airborne be worried about an acquisition by UPS? The answer is NO.

AIRBORNE & THE |900-POUND GORILLAS} |900

Federal Express has heavyheavy-weight power, but is it enough? FedEx recently raised its prices a plus for Airborne. Airbornes potential is a major threat to FedEx, thus Airborne is not worried.

AIRBORNE AND RPSuPARTNERS?



Is the relationship to RPS crucial to Airbornes future?

What can RPS and Airborne do for each other?

YES, YES, RPS can help Airborne cut into UPSs traditional customer base with its ground transport. Airborne will get use of RPSs info and tracking capabilities & RPS will get appeal & name recognition.

DISTANCEDISTANCE-BASED PRICINGuA GOOD MOVE?



 

In 1996 UPS changed its prices to reflect the distance of the parcel. In 1997, FedEx made the same changes charging more for packages that travel farther Will it work for Airborne? Customers are expecting this change simply as an industry trend, so YES.

FURTHER RECOMMENDATIONS


Competition comes from unexpected places; keep an eye on the Postal Service because they have done very well during the strike at UPS. Be aware of future moves by UPS because they will definitely try to recoup some of that lost volume.

FURTHER RECOMMENDATIONS CONT.

In order to continue healthy growth over the years, Airborne should consider an alliance or merger with RPS. Globalization: Further expand investments into overseas & global shipping; Do Not allow competition to get too ahead of you.

AIRBORNE TODAY; SINCE 1997

  

1998 - Airborne entered the Fortune 500 list for the first time. 1999 - Airborne@Home, an alliance with the United States Postal Service, was formed. 2000 - Carl Donaway became the company's new president, which lead to many managerial changes. Also that year, Airborne started a ground service for the first time in its history. 2001 - Airborne Express launched Ground Delivery Service and 10:30am Delivery Service. Airborne.com launched some services of its own, including the Small Business Center and Airborne eCourier. August 14, 2003 - Airborne shareholders approved the acquisition of Airborne, Inc. by DHL of Brussels, Belgium. The acquisition became effective the next day. DHL retained ownership of Airborne's ground operations and spun off its air operations as ABX Air, Inc.