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Airborne goes Postal
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June 3, 1999: 1:53 p.m. ET
Airborne teams with Postal Service in delivery pact as Net sales grow
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NEW YORK (CNNfn) - Airborne Freight Corp., the country's third-largest delivery firm, is linking with the U.S. Postal Service in a business-to-residential shipping plan expected to increase parcel volume for both parties.
The decision to link comes at a booming time for the delivery business as more and more Americans order goods over the Internet.
Under the partnership, Seattle-based Airborne (ABF) will handle the first leg of the shipments, sorting residential packages and delivering them to the post office nearest the final destination. The Postal Service, which has the largest civilian vehicle fleet in the country, will take care of the final leg.
Postal service spokesman Gerry McKiernan says the arrangement isn't intended to compete with United Parcel Service, the largest delivery company.
Rather, he said, it will leverage both parties' strengths to make inroads into the growing parcel market, which has benefited from a rise in purchases over the Internet.
"It's extraordinarily clever on Airborne's part," McKiernan said. "They are taking advantage of the best delivery network in the world."
Previously, delivery companies such as Airborne and Federal Express parent company FDX Corp. (FDX) conceded residential shipments to UPS because of the low margins.
Instead, they focused on more lucrative and centralized business-to-business shipping.
But under the new arrangement, Airborne will enter contracts with customers such as online booksellers and pharmaceutical companies, to handle the first leg of the residential delivery process
"The advantages are huge," said Tom Branigan, Airborne's manager of public relations. "We've talked to several of our companies about this, and quite honestly they're bouncing of the roof."
The arrangement, he said, gives businesses an economical way to ship to residential markets.
"This new service is specifically designed to address the growing demand of the business-to-retail market place," said Bob Brazier, Airborne's president. "As e-commerce and other factors continued affecting market trends, businesses are facing increased challenges to transport residential shipments in a reliable, economical way."
Airborne said delivery times will be 60 percent faster and cost about as much as UPS ground service. The service will start in mid-July.
Airborne shares rose 2-11/16 to 27-3/8 in mid-afternoon trading Thursday. 
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