Air Transport World

Night moves: express on the rise. (international small-package air service is growing)

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As expected, air-express service is growing around the world the way it did in the U.S. It is making inroads on products and shipment sizes that once were considered the province of airline freight departments and freight forwarders.

That is not to say the small-package specialists have it easy. TNT reorganized last year and sold its interest in Airborne after failing to pull off an operational linkup. Emery's profile has faded noticeably. DHL has sold a share to Lufthansa and Japan Airlines. Federal Express and UPS are investing billions in ground operations, fleets, computers and routes in order to offer international equivalents to their domestic systems. Both claim some profits. Postal authorities around the world won't cede market without a fight.

But FedEx figures show that international package growth is moving at about the same pace in the start-up years as domestic volume did in its initial period. FedEx Chairman Fred Smith told ATW. "When we bought Flying Tiger Line [in late 1988], 95% of their tonnage was in airport-to-airport service and 5% in express. Today, that's 50-50. Before it's over, that will increase to 70-80% express."

Already, FedEx's international traffic produces a third of its revenue and the company expects that to be more than half within five years. Smith thinks offshore flying eventually may produce 15-18% of volume.

UPS doesn't acknowledge many numbers of real use but its expenditures abroad show that it believes in the ultimate payoff just as FedEx does. Its cost-per-international-piece handled still is high, UPS admits in its annual report, but going down as volume rises.

Eventually, Senior Vp-business Development John Alden calculates, its new international expedited package service, slower than express but time-definite, will account for 70% of UPS'S international shipments. He suggests that 70% of what now is freight could move as small packages.

By the year 2000, international shipments may represent about 20% of UPS'S total, with perhaps 15-18% of that totally offshore.

Ted Scherck, president of Colography Group, a specialist in transportation matters, estimates that, from 1986 to 1990, freight declined as a percentage of (1) world air cargo shipments over 70 lb., (2) weight and (3) revenue, compared with express (see table page 64).

He suggests: "Freight's contribution is steadily declining. As in the U.S., shipments are going more often in smaller quantities to replace large international consolidations," the turf of traditional forwarders. The international market is about seven years behind the U.S. but catching up fast.

Airborne President Robert Brazier is not surprised. I don't see substantial differences between the foreign and U. …

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