Airborne Express, USPS In Deal to Test Home Delivery

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Express delivery company Airborne Express, Seattle, announced this week that it will enter into an agreement with the U.S. Postal Service enabling AE to offer their customers a business-to-residential shipping service called Airborne@Home.

Under the terms of the deal, AE will take advantage of the USPS' worksharing discounts that were approved as a part of the rate case earlier this year. The company will deliver their customers packages to the USPS' local distribution network, which is made up of 24,000 business units. Then, the USPS will deliver the ground parcels to residences, eventually give Airborne a more secure foothold in the growing business-to-residential delivery space.

"The whole business to residential market has really taken off because of factors such as the Internet" said Airborne Express spokesman Tom Brannigan. "So this is a logical extension of our current palette of service offerings."

The majority of Airborne's services move by air, but Airborne does have a truck network will serve as the linchpin to this service, giving them the ability to deliver to the USPS distribution network. By dropping packages off directly at the USPS distribution centers, Airborne can cut delivery time in half. In addition, according to the USPS, Airborne can save almost 50 on their shipping costs.

Efficient and cost-effective home delivery has become the holy grail in the parcel delivery business as a result of the growing number of consumers who regularly use the Internet to purchase products and services and who expect quick delivery of their goods to their homes. Unfortunately, however, the residential market is low-yielding, and over the past few years, companies such as Federal Express, United Parcel Service and Airborne Express have struggled to find a formula that is profitable in this sector.

RPS Inc., Pittsburgh, the small parcel ground shipper specializing in the business-to-business sector, has also entered the market with its announcement late last month that it will begin testing a new business-to-residential package delivery service by the end of July.

The pilot program will launch in Pittsburgh and is targeted to businesses that ship to residential addresses. Depending on the results of the pilot, the company could roll out a business-to-residential delivery service nationwide in spring next year.

While full details have not yet been sorted out, RPS said it will leverage its existing pickup and computerized package-sorting network to test the residential delivery concept and that it will use a separate and distinct team of 10 independent contractors to deliver the parcels. RPS is the only carrier in the United States that employs franchised or independent shippers to deliver 1.5 million business-to-business shipments a day, and it will follow the same regimen for home delivery.

RPS's plan is designed to work in conjunction with FedEx, since both companies are subsidiaries of FDX Corp., the transportation giant based in Memphis.

RPS spokeswoman Betsy Momich said that there is service gap right now in he market that RPS hopes to fill with some flexible service options.

Airborne Express however, is the only company that has struck a deal with the USPS -- a logical choice since the company already has a delivery network in place designed to reach every residence in the United States.

"We are helping Airborne what do what we do best," said Jerry McKiernan, a spokesperson for the USPS. "Deliver to everyone, everywhere, everyday."

Direct mailers are taking an interest as well.

"I think it is a pretty enlightened approach on the part of Airborne," said Tony Ruggiero, director of postal and distribution services at the Franklin Mint, Franklin Center, PA. "In fact, I though that the other service (UPS) might do this down the road."

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