Airborne Express

by Harvard Business Review

  • Airborne was third player in express shipping market behind FedEx and UPS
  • People spent $16-17B on expedited shipping services annually (1996)
  • There was a proliferation of new services in order to differentiate the players
  • Everyone was a customer in the expedited shipping business
    • Express mail became mainstream and the norm/expected
    • Low customer loyalty because of discounting
  • Collectively, the big three shipping firms sent 5 million packages per day; 98% of them on time
    • How they shipped all these packages?
      • Large fleet of vans/drivers
      • Packages driven to airport in containers; cargo containers were highly operationalized
      • Created massive hub facilities and other infrastructure
  • The big 3 were 85% of the market, but tons of second tier and international competitors
    • Led to massive industry war on everything: product, services, speed, and price
  • FedEx owned 45% of market and virtually invented express mail; ‘fedex’ became a verb
    • created from a term paper
    • integrated computer tech early
    • high quality control
    • aggressive marketing
    • great employee culture
    • int’l ambitions
  • UPS in second place with 25% of market share
    • originally charged fixed price
    • competed with USPS
    • regional hubs
    • owned by company managers
    • int’l ambitions
  • Airborne is in third place with 16% market share
    • fastest growing
    • Purchased airline facilities, unlike the other two players
    • relied on automation more than humans
    • focused on major metro areas
    • tech a differentiator
    • no advertising/marketing
    • low prices
    • frugal culture
    • no int’l ambitions
  • Airborne developed relationship with Roadway package systems (RPS) to reach UPS’s user base better. Also, there is potential for even closer integration


  1. Is Airborne in a secure position?
  2. How agitated are FedEx and UPS by them?
  3. Is avoiding the int’l market sound?
  4. How important is RPS to them strategically?
  5. Should Airborne do distance-based pricing like FedEx/UPS?

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