Shipper Study Shows Air Express Usage Down, Ground Parcel Up

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A Bear Stearns study of more than 70 major shippers including catalog companies released yesterday found that 72 percent expect their air express volume to grow 2 percent or less over the next six to 12 months, with the remaining group expecting volumes to decrease.


The Supply Chain Indicator study, which surveyed shippers during the third quarter of 1999, found that growth in domestic ground volume will be better than air express volume.


"Over the next six to 12 months, overall expectations for ground parcel growth are much higher than for air express, with only 10 percent of our shippers anticipating a modest decrease in ground volumes growth rates versus more than 30 percent forecasting a modest decease in the air," said Ed Wolfe, a transportation analyst at Bear Stearns, New York.


Basically, he said the survey indicates that parcel ground operators such as United Parcel Service, Atlanta, will outperform air express operators such as FDX Corp., Memphis, TN, and Airborne Freight Corp., Seattle, in the future.


In addition, Wolfe said the survey indicated that shippers are expecting minimal Y2K impact during the fourth quarter: Two-thirds of shippers polled expect no effect during fourth quarter 1999 from a buildup of inventory before Y2K.


"Y2K has received a lot of hype due to the potential for a strong shipping fourth quarter 1999 leading to a weaker-than-usual first quarter 2000," Wolfe said. "But this scenario doesn't seem to be playing out. Rather, shippers are indicating a very modest expectation for extra inventory buildup related to the attempt to avoid possible Y2K glitches."


He also said this was in line with what he has been hearing from transportation carriers "who continue to report a robust fourth quarter but cannot seem to pinpoint large pockets of inventory buildup," said Wolfe.
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