Airborne, Postal Service target business-to-residence market

Airborne Express has teamed up with the U.S. Postal Service to offer deferred delivery to residential markets.

By Staff -- Logistics Management, 7/1/1999

The demand for home delivery is growing rapidly in lockstep with the acceleration of consumer shopping on the Internet. As a result, carriers that have avoided the residential delivery market in the past now are looking for ways to enter that business.

Airborne Express is the latest carrier to jump into that market, and it has done so by teaming up with the U.S. Postal Service (USPS). Airborne and the Postal Service are testing Airborne@Home, a deferred delivery service that will enable businesses to ship letters, documents, and small packages to residences without sacrificing service or economy, say company sources.

"Before Airborne@Home, businesses had two ways to ship to residences," says Tom Branigan, public relations manager for the Seattle-based carrier. "They could ship overnight at a premium price, or they could use the existing ground service network, which can take up to 10 days."

Under the Airborne service, the carrier will use its truck network to transport Airborne@Home shipments to one of 24,000 local USPS offices within two days. The Postal Service then will deliver the shipments the next day.

Branigan says the service is priced comparably to the ground service offered by United Parcel Service (UPS), "but is up to 60-percent faster." The tests begin this month and a national rollout is expected within four to six weeks.

Branigan acknowledges that the company has been trying to find a way to deliver to residences for years. But the service has been cost prohibitive because many destinations are located in suburban areas where it is difficult to build sufficient density. Such a service became cost-effective when the USPS began offering "deep discounts" in January, Branigan reports.

Rising consumer demand also has given birth to other business-to-residence delivery services. RPS recently announced a residential service, scheduled to begin in the spring of 2000. "RPS has a very successful business-to-business model," says Satish Jindel, principal of SJ Consulting Group Inc. in Pittsburgh. "But it has not scratched the surface of the B2R (business-to-residence) market."

In the meantime, Jindel says Airborne might challenge UPS on some of the lower-weight, high-value shipments moving to residences. "Shippers may use Airborne for a computer peripheral," he says. "But they will not shift to Airborne for a 60-pound personal computer. They'll stick with UPS, which has the most extensive ground network, next to the USPS."

Ultimately, the Airborne business-to-residence service will face two challenges, says Jindel. It must find enough density for packages of all shapes and sizes. And it has to create a comfort level for its customers. "They may have some hesitation in switching to a service where packages are passed to the Postal Service for final delivery," he says.