In an action that may signal how Internet commerce can reshape the shipping industry, Airborne Express announced late yesterday that it is joining with the U.S. Postal Service to create a new residential package service.
The Seattle-based carrier said it will take advantage of newly created postal rates to fly parcels in its own planes to post offices around the nation and then place them in the mail. Letter carriers -- not Airborne Express workers -- will make the final delivery of the parcels.
The move is inspired, in part, by the growth of e-commerce firms that are selling large volumes of merchandise to residential customers across the nation. Their shippers, such as Airborne and Federal Express, deal primarily in business-to-business shipments and have no easy way of delivering those parcels quickly to widely scattered residential addresses, said Tom Branigan, an Airborne spokesman.
The Postal Service, which has been worried about the loss of first-class mail to e-mail systems, recently formed another alliance with one of its rival private parcel delivery firms. In March the federal agency reached an agreement with DHL Worldwide Express Inc. to offer two-day parcel deliveries between selected U.S. cities and Europe.
The latest move with Airborne, the third-largest parcel-delivery firm, needs no regulatory approval. It was announced as a test plan, but Branigan said the company already has signed up major shippers for the service. He declined to identify them or say what prices the company will charge.
He did say the price would be comparable to what United Parcel Service, the nation's biggest parcel delivery firm, charges for ground shipments. UPS and Federal Express are Airborne's principal rivals.
A number of shipping firms called consolidators have been created in recent months to take advantage of new package delivery rates that became effective earlier this year. The rates allow shippers to undertake the long-distance hauling of packages themselves and then drop the parcels at a post office near the final destination.
There are dramatic savings in package rates for shippers willing to do this, postal officials say. For example, a two-pound package mailed from Seattle to New York would typically cost $3.15 at bulk mail rates. But the same package dropped at a New York post office will cost the shipper only $1.21 in postage.
Postal officials have long expressed hope that they can use such discounts to become the delivery vehicle for many big shippers. That would allow the agency to recoup some of the costs of making stops at all residences, a margin that is likely to become critical as e-mail and electronics lure away much first-class mail.
A Postal Service official said last night that the new service Airborne will offer is not an attempt to take business away from either UPS or FedEx. "Everybody is growing. This is a healthy economy," the official said.
Both UPS and FedEx have been highly critical of the Postal Service's efforts to expand its parcel-delivery service, saying that this may be an area best left to private couriers.