AIRBORNE EXPRESS ANTICIPATES 3RD-QUARTER LOSS
Airborne Freight Corp., which operates as Airborne Express, said it will report a third-quarter loss, due to lagging domestic shipments and rising fuel costs.
Airborne said it will pursue several initiatives including ground service, third-party logistics capabilities and online offerings. The initiatives target small businesses and e-commerce, in order to boost domestic shipping revenues.
“Our strategy to be the low-cost operator remains unchanged, and we believe these actions will improve both top-line and bottom-line growth,” said Robert Cline, chairman and chief executive officer of Airborne Freight Corp. “These business initiatives, however, are unlikely to have any significant impact on overall growth rates in the third or fourth quarters.”
Airborne is considering whether to introduce a ground service in the second quarter of 2001 to complement its air express products.
On the logistics side, Airborne Logistics Services, a third-party provider, is Airborne's fastest growing division. The company is considering expanding ALS's services to include fourth-party logistics, in which the division would arrange all transportation and third-party logistics companies for customers.
In July, the company introduced zone pricing in some markets to try to recapture business lost to competitors. Airborne would like to have zone pricing implemented system wide before the introduction of a ground service product, said Carl D. Donaway, president and chief operating officer.
Airborne has seen success from its airborne@home service, which was introduced a year ago. In the service, Airborne delivers packages to U.S. Postal Service centers for delivery to final destination. In August, L.L. Bean became a customer of the service, and expects to delivery more than 1 million packages through @home during its first year.
The air-freight company increased its fuel surcharge last week to 4 percent, from 3 percent, effective Oct. 16. Airborne anticipates third-quarter fuel prices could exceed the year-earlier quarter by 50 percent, to more than $1 per gallon.
“Average operating cost per shipments has increased at a faster rate than revenue per shipment,” said Lanny Michael, chief financial officer.
