Carrier Update- March 2004

Carrier update
March 2004

Carrier Update- DHL
Working to integrate Airborne’s infrastructure with the entire DHL (www.dhl.com) network is a major challenge for 2004. As Richard Metzler, executive vice president, marketing, of DHL Americas explains, “We have a dedicated team of 200 people who do nothing but integration. Those of us on the senior management team spend 20% of our time on integration and 80% running the business. We have a separate head of integration at the senior management level that runs the teams.”
Although the company hasn’t aggressively marketed its full range of capabilities yet, according to Metzler, customers are aware of DHL’s position in the world and “are coming to us almost ahead of the marketing.” DHL offers domestic heavy freight capability as well as express and ground parcel. Shippers have the full range of services previously available with Airborne.
Pointing to the company’s strengths internationally, Metzler notes that its sister company, Danzas Air and Ocean owns a company doing air and ocean consolidation throughout Asia. It builds air and ocean loads, managing information at origin, then pushing shipment through to the U.S. West Coast where DHL Logistics handles break-bulk after Danzas does Customs clearance. Shipments are then moved into the DHL Americas network.
“We’ve added 11 facilities to help connect China with the U.S.,” notes Metzler. “The biggest opportunity for us is how we continue to collaborate — even though we don’t integrate — with our colleagues in Air and Ocean. We can create whole new solutions. Shippers are becoming more mode-agnostic. There’s a lot of white space in terms of meeting shipper needs.”
Metzler doesn’t feel new hours of service rules will have a great impact on DHL Americas’ operations. Driver hour regulations are less of an issue in a network like DHL’s with hubs and spokes and nodes that are predictable points in a closed network.

Carrier update- FedEx Freight
While hours of service will play a part in how truckload carriers conduct their business, less-than-truckload (LTL) carrier FedEx Freight (www.fedex.com) shouldn’t see any major impact, according to Douglas Duncan, president and CEO. Because of the way the company’s network is designed — all of its equipment runs from one facility to another — driver rest issues play no part, he says.
The company has been rebranding — from FedEx East and FedEx West to FedEx Freight — since late in 2002. Duncan says that the project is now well along, with the major work left in rebranding its trailers.
FedEx Freight increased its revenues last year with its yield up 8%. Anticipation is that revenues will continue their upward trend through 2004 because of higher yields from the company’s inter- regional and international services.
Duncan is bullish on international business. “We view it as a big part of the future of our business, “ he says. “More and more manufacturing is being outsourced overseas, which means the distribution point — rather than coming from a manufacturer or domestic distribution center (DC) — comes from a port or a DC in the port. It’s just a matter of us configuring the network.”
Rebranding is important since being part of FedEx, it gives the carrier a worldwide presence to gain distribution business from Asia and less-than-container-load service to and from Europe.
“We’re still leveraging the money-back guarantee we rolled out last September,” notes Duncan. “It continues to bring us new business and new customers, since it’s not about the money — it’s about the service.”

Carrier update- UPS
Scott Davis, chief financial officer of UPS (www.ups.com), expects domestic U.S. package volume to grow by 4% in 2004. As with other parcel carriers, Davis is bullish on continued success in the international arena, with the company projected to achieve a 20% increase in profitability.
Having invested $600 million in an initiative to optimize its package flow technologies, UPS looks to optimize the delivery of multiple services to customers — air, ground and international — out of a single delivery vehicle.
Basic to the effort is what UPS calls package-level detail (PLD). A high degree of automation is needed to make the entire system work, and it begins with the “smart” label.
The smart label contains the detailed information UPS needs to move a package from shipper to final customer in the ordered time frame. It also includes the number needed for package tracking.
PLD is targeted to be fully implemented in 2007 — which not coincidently is UPS’ 100th anniversary. Besides improving customer service, UPS expects PLD to reduce the mileage of package cars by more than 100 million miles each year and to save 14 million gallons of fuel annually.
UPS also recently introduced a web-based Quantum View Manage feature, aimed at small package shippers. It permits viewing shipping information for multiple accounts without use of a tracking number. Available data permit visibility into initial package processing and tell the shipper whether the package is in transit, has arrived, or if and why it is delayed.

4 ways to improve shipping practices
Dave Bennett, enVista’s director of cost management services, offers shippers these proactive measures against possible rate increases as carriers react to the new hours of service rules:
1. Revisit your standards and practices in relation to loading and unloading trucks on your receiving and shipping docks. Look for opportunities to eliminate driver wait time.
2. If you currently use carrier personnel for palletizing, sorting, counting, or any other function, find out the dollar value of that service so you can make a realistic cost comparison of paying higher freight rates versus performing the activities with your own staff, temporary or contract labor.
3. If you use appointment scheduling for inbound goods deliveries or outbound goods pickup, be aware of your notify-to-delivery/pickup times and make sure you are not scheduling further out than needed.
4. For finished product delivery to your customers, develop a list of those customers that historically delay the arrival of their goods from you.

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March, 2004

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