Copyright 1999 Journal of Commerce, Inc.
Journal of
Commerce
June 4, 1999, Friday
SECTION: TRANSPORTATION; Pg. 13
LENGTH: 523 words
HEADLINE:
Post office helps carrier go door to door
BYLINE: BY
CHRIS ISIDORE
BODY:
Airborne Express, with a little
help from the U.S. Postal Service, is the latest carrier to move into the home
delivery market.
The Seattle parcel and express letter carrier, which
has concentrated on being a low-cost, business-to-business service, expects to
start a test program to all urban and suburban homes for five to 10 major
customers in July. It will make the deliveries to about of the Postal Service's
24,000 sortation centers.
Those centers, the last stop for mail before
delivery to local post offices, handle more than 90 percent of residential mail
in the country.
""E-commerce is affecting the way business is being
done,'' said Tom Branigan, an Airborne spokesman. ""We consider this a natural
extension of our business-to-business model.''
RPS, a ground parcel
delivery service owned by Federal Express Corp. also announced an expansion into
residential business recently. But RPS will make its own deliveries.
Officials with United Parcel Service, which dominates the
parcel-delivery business, questioned the agreement between Airborne and the
Postal Service, saying it drove home the need for
postal reform and tighter controls on the USPS.
""The
Postal Service is trying to use its ability to partner with
private companies to get around the fact that it is still a government agency,''
said Tad Segal, a UPS spokesman.
He also questioned the quality of
service it will provide.
""The reason people use services like UPS,
FedEx and Airborne is that the Post Office sometimes takes three days to get a
letter across town,'' he said.
Airborne will use a new procedure the
Post Office has made available to consolidators that lets them deliver packages
directly to the distribution centers, where mail goes before it is sent to local
post offices.
Making the delivery to those centers generally saves 40
percent to 50 percent of delivery charges by the Post Office, and up to 78
percent in some cases.
The Postal Service has long had these kind of
cost-sharing arrangements that allowed deliveries to larger regional centers for
a smaller percentage savings. While consolidators have built up that business
before now, this is by far the largest and most ambitious effort of its kind.
""This is a breakthrough,'' said Gerry McKiernan, a Postal Service
spokesman.
Ed Wolfe, analyst with BT Alex. Brown, said the success of
Airborne's efforts will depend on the pricing and the density it is able to
build up.
""You've got to have the density to make it cost effective,
and they're starting off without the density,'' he said.
According to a
survey by Zona Research last year, about 55 percent of consumers making
purchases over the Internet have the deliveries made by UPS, while the Postal
Service is second with about 32 percent of deliveries, mostly using the USPS'
profitable priority mail service.
McKiernan said it's not clear if this
will take business from the USPS' priority-mail service.
""If a customer
comes to our door and does what we say they should do under the program, we
can't say, "This is going to eat into priority mail. We won't take it,' '' he
said.
LOAD-DATE: June 7, 1999
