They Fight by Night

In the Desert outside Tucson, it's 109 degrees--slow weather for a job that's all speed. No air conditioning in the gray Ford minitruck with the Airborne Express logo, and it's a good 300 miles racing down to Nogales and back before this day says good night. No sweat. Steve Robinson likes the heat. In fact, he digs the entire express racket--this real-life, zip-fast desert game of Beat the Clock. In the slip stream of C.B.-equipped truckers, he's chasing booty that includes legal documents, medical supplies, high-tech gizmos and who knows what else due "absolutely positively overnight." No, that's not Airborne's slogan; it belongs to Federal Express, whose long shadow haunts everyone else in this frenzied business. (continued on page 158) Fight by Night (continued from page 79) "Speak of the Devil," says Robinson at an industrial park as a Federal truck pulls out as he shoots in. Then he takes careful aim with an imaginary rifle.

It's 4:50 when Robinson finally tears into the garage at Airborne's Tucson International Airport headquarters, beating his five-P.M. deadline by a handy ten minutes. Here, his pickups will join more than 200 parcels brought in by the 11 other Tucson-based drivers. Tucson, like Las Vegas, is an Airborne satellite outpost for the region's main station in Phoenix, connected to it by the dual-engine Cessna idling on the runway.

Precisely at 5:40, this feeder plane lands in Phoenix, where its pay load is quickly unloaded, then, along with the Las Vegas and Phoenix cargo, repacked into a silver Airborne DC-9 sky freighter. In the gleaming twilight waits the competition: United Parcel Service's brown-white-and-gold Boeing 747, Emery's red-and-white Boeing 727, Federal Express' purple-orange-and-white DC-10--all poised on the tarmac, about to engage in the final leg of the nightly battle for overnight-delivery supremacy.

"It's a war. It's a dogfight--a shoot-out in the sky," says an Airborne executive. "We've got to get better, more efficient, faster all the time. Although we've never had a losing quarter, the competition is always closing in for the kill."

The murderous metaphor is no exaggeration. This, after all, is shakeout time in the overnight-express business, complete with a slowdown in growth, price wars and severe austerity programs. Ten years ago, this six-billion-dollar industry did not exist. Its rocket growth has been predicated on entrepreneurial daring and marketing strategies that have made advertising history and technological breakthroughs. It has also profoundly reoriented the way people do business. But little of it comes easily.

"If you don't provide the service, adios," says Robert Brazier, president of Airborne. "This has become a commodity business where you're only as good as your last delivery." Brazier sits in his office at Airborne's Seattle corporate headquarters, fully aware that a lot of people think his company is on the ropes. He's read the articles with headlines such as "Overnight-Mail Firms Face Sunset." He knows what he's up against.

"We've got U.P.S. on one hand offering everybody a low price," Brazier says, "and on the other end, Federal Express saying they offer the best service. We're in the middle. We price close to U.P.S. and about match Federal's service. Now, if Federal and U.P.S. go after each other," admits Brazier, "we could get hurt pretty bad if we're not quick on our feet."

Some Wall Street savants believe that companies such as Airborne, no matter how fast they run, risk the fatal crunch of a squeeze play. "This could easily become a two-company business," predicts John V. Pincavage of PaineWebber. "Nobody else has the combination of efficiency and mass of Federal Express. And U.P.S. is like an M-60 tank coming over the hill. It's a five-billion-dollar company--it has the resources for the long haul."

Federal Express' competitors have more than it and U.P.S. to blame for the stormy skies. The cloudy forecast is partly due to market maturation. A few years ago, deliveries could be counted on to increase by 35 percent or more. Now predictions for growth in the next five years hover closer to 15 percent. In most industries, that's a healthy rate; not in these air wars, where the increased number of competitors means a smaller slice of the pie for everyone. Adding to the slowdown are businesses that, after tallying up the bills, have become somewhat circumspect about what truly has to be there absolutely positively overnight.

Even Federal Express has had its wings trimmed just a little; it took a bath recently on its electronic-mail service, ZapMail. Yet with more than 37 percent of the express-mail market, it is the sole player relatively assured of a profitable future, though it, too, must play lean and mean to stay sky bound. And that requires speed afoot--on the ground.

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There are an estimated 500 drivers--U.P.S.', Purolator's, Federal's, Emery's, Airborne's among them--dueling for Manhattan every working day.

"The day's just starting," says Richie Diana, "and already I'm sweating bullets." Armed with several packs of Kent IIIs and a bottle of Excedrin, Airborne driver Diana races through the maze of Midtown Manhattan, the bane of traffic cops and the target of violation-mad meter maids. He'll make roughly the same number of stops as his Arizona counterparts but will cover a fraction of the distance.

It helps that the liveried doormen at the city's most fashionable addresses all seem to know Diana, letting him in quickly to save precious time. For his part, Diana revels in these upscale environs. "Frank Gifford was here yesterday," he confides, taking the escalator two steps at a time up to Lina Lee, a plush boutique in Trump Tower. "Wait until you see the guy at the desk in this place," he says, entering the casting agency for Miami Vice after a regular stop at IDANT, a sperm bank.

Back on the street, Diana hooks up with another Airborne truck driver, Richie Tynan, who works the morning deliveries. They break for coffee at Burger Heaven. Tynan used to be an Airborne bike boy, tooling on a bicycle equipped with an oversized silver box, hazardous work but duly rewarded. In New York, Airborne is a Teamster shop, and even bike boys make upwards of $30,000.

"Catch that traffic," says Diana, pointing toward a full-tilt, horn-blaring gridlock mess. "In winter, forget about it--you take your life in your hands. And out of the truck, some places are a real hassle. Try figuring out Sloan-Kettering Hospital. One pickup at Bloomingdale's on the seventh floor through that mob can take half an hour."

Diana and Tynan part company at the loading zone, in the shadow of AT&T's massive neoclassic headquarters, then Diana heads off for an afternoon of pickups. "Down on Canal Street yesterday, one of our drivers got caught in a shoot-out," says Diana, crossing the 59th Street Bridge on his way to Kennedy Airport later. "The dispatcher told him to duck and just keep driving."

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At Airborne's Kennedy Airport warehouse, 7500 parcels--Diana's pickups, along with those of 115 drivers and 39 bike messengers--will be hurriedly loaded onto the waiting DC-9. There's not much chatter--this is deadline business. "We don't have much leeway," says the district-operations manager, Bill Blackford. "If we're late with deliveries, our customers are all over us like a cheap suit."

Three thousand miles away, on the other coast, an Airborne sky freighter laden with 15 tons of cargo lifts off the runway at Los Angeles International Airport and heads toward cruising altitude. "You have to approach each flight as a mission," says Captain Carl Cross, setting the automatic pilot. "Six years ago, with another air-freight company, I'd go to Little Rock, Memphis, St. Louis, Chicago and then reverse it every night--eight to ten hours a night in a small twin-engine airplane. I'd go from icing conditions at night to thunderstorms in the early morning. One time I asked this old guy sweeping the hangar if I could borrow his broom. I took the handle and beat the ice off the wings. He said, 'You going back up?' I said, 'Yeah.' He just took his broom and walked off, shaking his head."

Cross doesn't make ten stops a night anymore--maybe only four or six--but he's still racing the clock on a schedule that begins early in the evening and doesn't end until way past daybreak. "There's a lot of things you can get away with flying at night that you can't during the day," says Cross, smiling. "The absence of passengers makes flying a lot more fun. Freight doesn't talk back. A Republic Airlines captain once hitched a ride with us and his eyes got big as plates. He couldn't believe we flew the plane the way it's designed to be flown."

The first destination of Cross and the rest of the Airborne fleet roaring through the darkness tonight is the company's airport hub in Wilmington, Ohio, a former Strategic Air Command base and a cow town the freight dogs call Hooterville. Airborne is the only air courier that owns an airport--a crucial timesaver. No stack-ups at Hooterville during the post-midnight hours of frenzy--this is a facility designed expressly for express.

Usually it's no problem hauling 15 tons of express mail, executing the perfect slam-dunk landing on the giant cross of runway lights. But once in a while it gets hairy. That's when express-mail pilots earn their pay. The technical term for it is Category II, which means vicious weather and ground visibility down to 1200 feet.

While the pilots chill out at Marvin's, the on-base greasy spoon, with its crummy rec-room paneling, fluorescence and Formica, a small assault army attacks their sky freighters. In the glare of white light and equipped with giant forklifts and conveyors, Airborne's troops rush to unload the cargo and route it to the giant sort center. One section of this vast warehouse is dedicated to hazardous materials--everything from the combustible to the radioactive. Specially trained personnel ensure that restricted goods are packaged according to the Federal aviation code. On occasion, the hazardous-material area includes a live guest, such as the gorillas on their way to a reunion with their mother at the Omaha Zoo.

Like Federal Express' hub in Memphis, U.P.S.' in Louisville and Emery's in Dayton, Airborne's hub is within 600 miles of more than two thirds of the nation's population. Virtually all Airborne packages, regardless of origin or destination, pass through here. Even an overnight letter sent from Boston to New York goes through the Wilmington hub. That creates volume and pressure.

"We had a plane crap out in Greensboro," says Tom Poynter, hooking a walkie-talkie onto his belt. "We had to send a backup out of here, and that's going to make the whole system late." Poynter, a former trouble shooter for U.P.S. who runs the sort center, is constantly racing the catwalks of this giant maze, overseeing the movement of tens of thousands of parcels. Right now, he's just out of his nightly logistics meeting, and there's a problem. Poynter knows he can handle tonight's crisis--there is some leeway in the system that allows for the inevitable mechanical or weather problem in the network. But it does mean that the bike boy on Wall Street and the driver out in the desert may have to pump extra hard to make delivery deadlines. Of tomorrow's deliveries, 96 percent will be made before noon, which is no small feat considering the variables involved in keeping the system goosed and greased.

Operating an airline such as Airborne or Federal Express is an expensive proposition. Prior to the landmark airline deregulation of 1978, freight forwarders--middlemen shipping freight on commercial planes--were not allowed to own more than ten percent of an airline; after, they could purchase their own aircraft. New planes, however, don't come cheap. The Airborne fleet--20 DC-9s, four DC-8s and 11 Nihon YS 11 turboprops--is ancient in aviation terms. The DC-8 was introduced more than a quarter of a century ago, the DC-9 a few years later, and flying in a noisy YS 11 is something out of Terry & the Pirates. These planes may be gas guzzlers, but they are also reliable and can be bought cheap on the open market. A new cargo plane, such as a Boeing 757PF, can cost $40,000,000; a used DC-9 can be bought and refurbished for less than $10,000,000. Hence, Airborne's estimated start-up costs were at least $100,000,000--a sizable gamble to catch up with Federal, which already had a five-year head start. "I was dead set against it," remembers Robert Cline, then Airborne's chief financial officer and currently its chairman and C.E.O. "This was dumb. We had a capital base of $30,000,000 and we were talking about spending $85,000,000 just to buy aircraft."

"It was hard for us to believe initially there were so many people willing to pay so much more to move a document overnight," adds Brazier. But his perception of the market soon changed. It was time to do battle, he argued. Quickly.

In 1980, when Airborne decided to take the plunge and go after Federal--far and away the industry leader, thanks to Federal's founder and guru, Fred Smith--it was faced with not only an enormous capital investment but added competition. Fellow freight forwarder Emery, also worried about being left behind, had entered the business.

Initially, the new competitors took their blows. Emery's long-term debt as it entered the express business went from zero in 1980 to $70,000,000 in 1981. Airborne's earnings plummeted from $9,500,000 in 1979 to $3,100,000 in 1981--a capital investment to transform the former SAC base in Wilmington into a hub, coupled with the purchase of a fleet of airplanes, almost put the company out of business. Little wonder that to this day, Brazier says, "I hate airplanes. I hate to fly in 'em and I hate to own 'em, because they're so goddamned expensive."

By 1983, Airborne had righted itself. Most of the kinks were out of its system and it, along with everyone else, enjoyed a growing share of an industry fueled by an upswing in the economy. And it didn't hurt that some shrewd minds were working overtime on Madison Avenue.

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Airborne and the others that entered the air-courier field were benefiting from a market that Federal Express had in large part created by launching and sustaining one of the savviest ad campaigns in the history of advertising. Federal had not only created a new market but had made its name synonymous with it. By the time the competition geared up, the "absolutely positively overnight" campaigns had made "Federal Express it to me" part of business vernacular. Ally & Gargano, one of Madison Avenue's most innovative agencies, orchestrated Federal's pitch to perfection, preying on people's anxiety in waiting for crucial deliveries and on the rampant mistrust of the U.S. mail. One print campaign promised delivery "absolutely positively untouched by civil servants." Whacked-out commercials, such as the one featuring Methedrine-mouth John Moschitta (whom someone at the agency had first spotted on That's Incredible!), won awards and customers.

When Airborne decided to go after Federal, it was contacted by Jerry Della Femina, whose firm, Della Femina Travisano and Partners, had worked on the Emery campaign. Della Femina relished the challenge of topping the work he had done for his former client. The firm created an Avis-Hertz scenario--Airborne/Avis was working harder to catch Federal/Hertz (Emery was left in the dust). A controversial spot declared, "Federal is good; that's why Airborne has to be better." Another said, "We don't talk fast, we move fast."

On TV alone this year, express couriers will shell out more than $100,000,000 to pitch fast talk and service. But the spending spree may be over. With few exceptions, express companies are now rerouting funds to direct sales and improved service. "Percolator, Potatolator," Brazier is fond of saying, evoking a recent Purolator spot that made fun of the company's name. "There are so many ads out there, I don't think anybody can tell the difference. What makes you stand out is price and the service you provide."

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The same turbulence of buys, sells and mergers that has recently affected the commercial-airline industry will no doubt leave its mark on the sky-bound pony express. To survive, Federal's competitors must race to build their package volume in order to bring down costs per delivery. But as volume grows, they must sink more money into capital expenses for equipment and personnel.

These days, the smart money is on consolidation of two or more of the air couriers. There's a consensus that international markets are key to growth, and most of the domestic couriers have already made moves in that direction. The possibility that a foreign courier such as DHL Worldwide, looking for a strong domestic network, will acquire Airborne, Emery or Purolator is often discussed. In January, Australia's TNT Limited--a giant transportation conglomerate--acquired 17 percent of Airborne's stock, for example.

"I don't think there's one person in this industry who at one time or another hasn't talked to the competition," admits Brazier. "A lot of people on the outside look at the industry and ask, 'When is [consolidation] going to happen?' But there's a lot of ego built into this business from the standpoint of saying, 'We have the capabilities of being a survivor on our own. If there's going to be some taking done, we'll do the taking.' "

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It's 5:30 A.M. Marvin's is silent. The nightly poker game in the pilots' lounge has broken up. In just the past few hours, 100,000 parcels have rolled onto the sort center's Möbius strip of ramps and conveyor belts and have been rerouted to Airborne's fleet of planes.

The sky freighters are easing down the runway. Carl Cross and his copilot, Rick Spurlock, go through their pretake-off check lists, preparing to fly the last leg to New York. Once airborne, the aviators are eager to pick up extra minutes. George, as sky truckers call the automatic pilot, is doing the flying. Cross removes the silver-dollar-size cover on the trim knob at the back of the console to reveal a picture of a naked woman. "They like to put smile stickers on the back of fire levers, too," he says. "Just what you want to see when your plane catches fire."

Cross had to pull all those fire levers fast one icy February night. As he flew out of Philadelphia with 18,000 pounds of cargo, 100 feet after take-off, both of his engines flamed out. A freak occurrence. An instant-death scenario. In the six seconds he had, he made all the right moves and crash-landed the plane, smashing the landing gear and breaking a wing in two in the process.

"Something like that happens, you know God has already made up His mind," says Spurlock.

"When I saw those emergency fire guys in silver suits, I thought, Oh, this is what angels look like," remembers Cross.

Cross and his copilot sustained some injuries but managed to walk away from the wreckage. "It could have been a lot worse," an air-traffic controller told The Philadelphia Inquirer, praising Cross's actions. Yes, agrees Cross, it could have been a lot worse. They could have lost the cargo.

"'One of our drivers got caught in a shoot-out. The dispatcher told him to duck and just keep driving.' "