Airborne Express 3

10731 Words43 Pages
Harvard Business School

Rev. May 23, 2007

Airborne Express
The officers of Airborne Express could hardly be more pleased.1 Results for the third quarter, 1997, were spectacular. Revenues for the quarter were up by 29% over the previous year, and yearto-date net earnings had increased by more than 500%. Airborne’s management team knew that the great results were, in part, fleeting. As the third largest player in the express mail industry, Airborne had gotten a boost from the recent strike at rival UPS. But that seemed to account for only a small portion of the earnings gain, perhaps one-fifth. Roy Liljebeck, the company’s chief financial officer, commented: While the UPS strike was the headline news in the quarter, Company
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Customers. Virtually every business and many individuals used express delivery services to ship their most urgent documents and parcels. Federal Express alone reported that it had two million “current customers” in 1996.4 The highest-volume customers, including some catalog retailers, relied on express services for the vast majority of their shipments. In industries such as financial services and consulting, express mail had become the standard means of delivering documents. Businesses varied significantly in terms of volume of shipments and the predictability of volume. Items shipped by express mail usually had a high ratio of value to weight and were perishable in some sense of the word. Business documents, electronic components, medical samples, and replacement parts were typical shipments. Shipments were diverse, however; one firm reported that it had shipped rhinoceroses, art collections, race cars, and fishing bait.5 The portion of goods considered perishable or time-sensitive had increased over time, as companies sought to drive inventories out of their logistics systems and compete on the basis of time-to-market. A general acceleration in the pace of business and shorter fashion cycles in some industries also tended to broaden the customer base and to increase the express volume shipped by each customer. A number of factors influenced the decision to ship an item by express mail rather
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