THE IDEA WAS TO BUY A BUNCH OF JETS, FLY ONLY AT NIGHT, SHUFFLE PACKAGES AT ONE CENTRAL LOCATION, PICK UP AND DELIVER TO CUSTOMER'S DOORSTEPS AND CHARGE OODLES OF MONEY. IT WORKED!
A moonless, winter midnight in Memphis beside the Mississippi and it's time for the nightly miracle. Forty-eight purple-tailed jets, stuffed with 90,832 terribly important packages, slide down out of the windless Tennessee sky. Four hours from now the packages will be shuffled and gone, off to Buffalo, Burbank, Bangor and 15,000 other communities.All terribly important, all shuffled, all gone.
Somewhere between here and Washington, moving at 517 miles an hour in the hold of Boeing 727, is a six-pound box of monkey kidney tissue that the Oregon State Public Health Laboratory needs by noon tomorrow. A rhesus monkey gave his life to science two weeks ago in the Flow Laboratories of McLean. His kidney tissues are fading fast. If the package doesn't arrive in Portland tomorrow, the tissue will be useless for a lab test that's supposed to isolate influenza. If Federal Express, the overnight package airline, muffs it, shuffles the kidneys wrong in Memphis, the monkey will have died in vain.
When it absolutely, positively has to be there overnight, why -- in the name of modern technology, the bottom line and all that is holy in corporate America -- does it first have to come to the town where Elvis Presley died?
One reason is that the father of Federal Express lives here. That's Fred Smith, and, by all accounts, Fred Smth is a helluva guy.Listen to one man who works for him: "Fred's a 36-year-old former Marine who's attractive, intelligent and rich. He has the same effect on a crowd as John Kennedy. He could walk into Yankee Stadium and everyone would turn their heads and stare. Fred Smith is the kind of man you want to root for. You want him to score."
Frederick W. Smith has scored; since he founded Federal Express eight years ago, he has amassed a net worth of $92 million. Fortune magazine describes his company as one of the top 10 business triumphs of the 1970s. Last year Federal Express had gross revenues of $415.4 million and net income of $38.7 million, up 81 percent from 1979. Smith was the first to cash in on the national need for overnight delivery of computer components, legal documents and monkey kidneys.
Inspiration struck when Smith attended Yale in the mid-1960s. Desperate to find a subject for a much-procrastinated economics paper, Smith stayed up late one night and stumbled upon his legendary idea: Buy a fleet of jets, fly only in the middle of the night, shuffle packages at one centrally located hub, pick up and deliver to customers' doorsteps and charge oodles of money. He got a C on the paper.
"I had the advantage of not knowing anything," Smith recalls. His model was the phone company, which uses a central switching exhange to transfer calls from distant points. As an ignorant undergraduate, Smith remembers thinking: "With the hub, the aggregate of all transmission would be enormously efficient."
The storybook epiphany at Yale is just one chapter in Smith's storybook life. Born the son of a millionaire Memphis interstate bus entrepreneur, Smith suffered as a child from Perthes' disease, a rare hip-bone ailment. He taught himself how to beat up bullies with his crutches. He overcame this disease, became a pilot at age 15 and played first-string football at Memphis University School. After graduating with honors from Yale, he joined the Marines and as a pilot flew more than 200 combat missions, winning five medals, including the Bronze and Silver stars.
Since 1972, Smith has proved himself a young Arthur in corporate Camelot, extracting money from stone-hearted investors with an almost mystical ease. In the largest venture-capital deal in American history, he raised $91 million, in addition to his $4 million inheritance, to fund Federal for its first three years. Despite Smith's sexy idea, the company foundered near bankruptcy for more than two years, losing $29 million in its first 26 months. To help bail out Federal, Smith says he once flew to Las Vegas with $200, won $26,000 in blackjack and took the money home to Memphis to help meet his payroll.
"I didn't know anything about gambling. There must be some sort of foreordination for the company," Smith says.
More about the amazing Fred Smith later. It's now 2:15 a.m. in Memphis and the Portland-bound monkey kidneys, along with 27,063 pounds of cargo, have just landed on a Federal 727 out of Baltimore-Washington International airport. The shuffle is about to begin.
After taxing from the Memphis airport to the attached Federal Express package sorting complex, the 727 with the monkey kidneys aboard pokes its nose into a sprawling U-shaped hub building. Like dairy cows in a milk barn, the 727 and 47 other jets (including two giant DC-10s, 13 other 727s and 32 smaller French-made Dassault Falcons) crowd around the hub to drop their freight and slurp fuel. The Federal fleet goes through 225,000 gallons of jet fuel a day. A cargo door on the port side of the 727 is thrown open, disgorging seven tent-shaped aluminum cargo containers. Hooked together like boxcars, the containers are pulled into position where an insomniac Federal Express army of 705 mostly part-time sorters unloads them, tossing packages on conveyor belts.
The night spectacle of the sort -- pinball-like flappers swatting packages off conveyor belts, honking and lurching electric tractors, a herd of jets gleaming in harsh white light -- is presided over by a giant digital clock on top of the hub. At 12:20 a.m., the clock was set to count down from 120 minutes. The sort was supposed to be done when the clock ran out. It wasn't. A DC-10 from Los Angeles, carrying about 15 percent of the night's packages, arrived late.
Alongside the conveyor belts, the part-timers, primarily local college students working from 12:30 a.m. to 3:30 a.m., have sorted stranger and more threatening things than monkey kidneys.
They've sorted: an eight-foot-long bright green plastic pickle (which wasn't particularly threatening), canisters of xenon 133 radioactive gas (which were), peek-a-boo panties from Frederick's of Hollywood, radioactive human sperm, baby body parts, laboratory rats (some of which have escaped into the hub) and thousands and thousands of electronic gizmos with names like TRW Cinch Connections and Racal Vadic data channel modems. The electronic devices, primarily replacement parts for computers, amount to about a fourth of Federal's business. The record package count for one night, set during the Christmas rush in December, is 100,331.
On that one night, Federal Express took in about $2.5 million. It isn't cheap to ship a package overnight through Memphis. The monkey kidneys, weighing six pounds -- two pounds less than the average package cost $34.84 to ship.
Gene Powell, the 727 captain who will fly the monkey kidneys to Portland this morning, has no idea how the packages are sorted. Powell, a 41-year-old Mississippi farm boy who's been flying for Federal since its inception, doesn't have to touch a single package to make his $91,000 a year. At 2:45 a.m., in the flight operation center (about 400 yards and two light years from the package handlers), he's eating buttered popcorn with copilot Don Grant. They're worried about the weather in Seattle, an intermediate stop, along with Denver, on the Portland flight. Their flight engineer, Mark Gatling has already gone out to a 727 parked near the hub to warm up the cockpit and check over the plane.
"It ain't good, is it?" Powell asks Grant, who has just received a weather report indicating heavy fog at Boeing Field in Seattle. The airfield is forecast to be "illegal" for landings until late morning because of low visibility.
"This means I got to go to work," says Grant, a hulking 44-year-old former Marine fighter pilot. He looks up alternate airports -- Yakima, Moses Lake, Spokane. But a decision doesn't have to be made right away.
"We've been released (by federal flight controllers) to Denver," Powell tells his copilot. "From there we'll see if we can get to Seattle."
At 3:10, Powell, Grant and scores of pilots -- dressed smartly in powder-blue shirts with epaulets, dark blue ties, trousers, overcoats and flight caps -- scramble to waiting shuttle buses on the tarmac. Jets are already pulling out, jamming up near the take-off runway, engines screaming. The gritty smell of jet fuel lies heavy on the night air. "Looks like there's an attack going on somewhere," Powell says in the bus, en route to a 727 named Nicole. The predawn scene has a discombobulated World War II romance: It's "Twelve O'Clock High" in Memphis with packages and purple airplanes.
In the cockpit of Nicole, the pilot, copilot and engineer strap themselves in, commence a liturgy of gauge checking and start the three jet engines. At 4:03 Nicole takes off, with 36,290 pounds of packages in the back where passengers usually sit. The plane is 90 percent full. Captain Powell does not introduce himself to the packages, welcome them to the friendly skies of Federal Express or point out the twinkling lights of Little Rock, Fayetteville or Tulsa.
"Packages don't get sick, they don't bitch and they don't spill their drinks," says Powell. He makes no attempt to fly around bumpy air for the convenience of the monkey kidneys. Yet his job is astoundinly similar to that of pilots who fly passengers. Federal pilots operate under the same federal flight regulations, have equivalent training, undergo the same twice-a-year medical examinations and check flights and make about the same money as airline passenger pilots. Powell's yearly salary of $91,000, Grant's $60,000 and Gatling's $45,000 for no more than 80 hours flying time a month put them above average for passenger pilots, slightly higher than United Airlines, the nation's largest passenger air carrier. The pilots spend about 15 days a month out of town.
By airline industry standards, Federal Express pays its 420 pilots well and has excellent benefits. Because the young company has grown quickly (with revenues nearly doubling every two years), its pilots have gained seniority faster than their passenger-flying counterparts. Federal has the youngest DC-10 captain in the United States: Terry Crosby, 35 years old, who makes $105,000 a year. A pilot can become a 727 captain at Federal after six years whereas attaining a similar position with a major airline could take 20 years. Federal's waiting list of qualified pilots who want jobs is 6,500 names long.
There are, however, disadvantages to being a pilot in this fly-by-night operation. Federal pilots feel passenger pilots look down on them.
"They think of us as dirtball, has-been, beer-belching pilots with leather jackets and silk scarves," says Eddie Storo, a pilot who's been with Federal two years. "They expect us to grow up and come fly passengers."
Also, Federal owns relatively old airplanes acquired from other airlines. Nicole, for instance, a 13-year-old former United jet with 22,739 takeoffs and landings, has spent 32,345 hours in the air and flown approximately 11,756,000 miles. Excellent maintenance, the pilots say, mitigates the age problem. But nothing mitigates the pilot's major complaint -- flying by night, only flying by night. That, they say, makes life miserable.
At 31,000 feet over Arkansas, with the autopilot flying Nicole to Denver and little to do in the cockpit but kill time, Capt. Powell and his crew bemoan their lousy hours. Says Powell: "When I'm not flying [which is about half the time] I still live like most ordinary people -- the daylight cycle, grocery shopping, church and that stuff. But I have to stay up all night to work. The end result is you lose sleep. If that doesn't bother you, that's great, but it bothers me. When I work, I'm almost always uncomfortable."
Many Federal pilots believe they are shaving years off their lives by flying at night. Mark Gatling, the 31-year-old flight engineer on board Nicole, has worked the nights for two years and says the hours are killing him: "I don't see how I could last 29 more years [until retirement at age 65] in this business."
Dr. Saul B. Sells, a research professor and director of the Institute of Behavorial Research at Texas Christian University in Fort Worth, Tex., says that while sleep interruption can make life seem miserable, the precise physiological effects are unknown. He has begun a study of Federal pilots to look at the effect of constant time zone changes and accumulated fatigue on moods and possible premature aging.
Night flying, however, apparently isn't dangerous. Federal, the nation's largest airline in unduplicated miles flown, has never had a fatal plane crash. The worst accident occurred in October of 1975 when a Falcon tried to take off in Warwick, R.I., and smashed into a DC-9 and a 727 on the runway. Airports are usually empty and air traffic very light when Federal Express planes are working.
On the runway in Denver at 4:48 Mountain Standard Time. It's dark and mercilessly cold and only one other aircraft besides Nicole can be seen moving. A bundled-up ground crew of four (Federal has 8,233 employes; 4,750 are in Memphis, the rest spread out in places like this) labors on the runway.With a hydraulic loader, they pull four cargo containers weighing 15,000 pounds out of the plane and stuff them into a tractor-trailer rig.
No packages bound for Seattle are loaded here because every package that Federal ships must first go to Memphis for the Sort. Ludicrous as it may sound, a package shipped from Denver to Seattle flies to Memphis first, then back to Denver and then to Seattle.
Nicole has burned 2,560 gallons of fuel to get here from Memphis. She refuels, needing 5,230 gallons of fuel for the Seattle flight. But the pilots, having heard only sketchy weather details during the flight, still don't know if they can file a flight plan for Seattle.
Powell and Grant leave the airplane to call the Federal Express flight operations center in Memphis which has a computer link to Eastern Airline's national weather forecasting center in Atlanta. After 76 minutes on the ground, the pilots return to Nicole, strap in, go through the preflight liturgy and take off. Atlanta says Seattle is legal.
In winter, bad weather more than anything else forces Federal to renege on its promise of overnight delivery. Chicago snows in, Seattle fogs over, Newark ices up. Federal claims and its regular customers confirm that about 97 percent of the packages get through on time. (The Postal Service, by comparison, claims 96 percent on-time overnight delivery for its "express-guaranteed" mail.) Weather accounts for 1 percent of Federal's delays; mechanical failure of the jets, improper addressing, "missorts" and theft account for the rest. Federal says it loses about 160 packages a month, or about .002 percent of each night's shuffle.
To deal with the goofs that a $14-million-a-year-plus advertising campaign claims do not occur (television commercials in which a long-faced secretary is shown staring at a telephone and the announcer says, "They wait and they wait for the complaint that never comes"), there are 50 tracers in Memphis who soothe outraged customers and try to figure out what went wrong.
Neither the soothing nor the tracing is easy. Consider the case of the switched shipping bill which sent black lace underwear to a church in Los Angeles and religious pamplets to a private home in New York. Among other hard-to-explain gaffes, Federal has lost a family heirloom wedding dress (prompting both the bride-to-be and her mother to call in, sobbing), mutilated an X-ray needed for surgery on a baby and permanently misplaced irreplaceable child photographs of a former Illinois senator. Recently some live lobsters disappeared. On the morning of Jan. 6, 1981, Joe Novak of Cupertino, Calif., opened two crates of live lobsters shipped the day before from New Bedford, Mass., and discovered 13 missing. Discounting an organized escape by the lobsters, Novak called Federal. In Memphis, tracers are investigating.
"The customers see our advertisement and they take it as its word," complains Bill Daniels, manager of the complaint department which fields about 1,000 complaints a day. "The advertisements can create the impression in someone's mind that overnight delivery is absolutely, positively guaranteed. We are not guaranteeing delivery."
Federal actually guarantees only a "commitment," to deliver a "priority-one package" by noon of the day after a pick-up. If the company fails, it will refund the shipping charge. "I'd like to see them change the slogan to 'absolutely, positively overnight or your money back,'" says Daniels.
Over Salt Lake City at 6:51 Mountain time, with a pale orange sunrise outracing them to Seattle, the three pilots aboard Nicole are tired, red-eyed and jabbering to make time pass. Because of light air traffic, the plane has an arrow-straight flight route into Boeing field. The autopilot is on again. Copilot Grant, drinking coffee, his feet on the jet's control panel, listens off and on to Charlie Douglas' all-night truckers show on radio station WWL in New Orleans ("Freightliner Fever" and "Ride That Rig to Glory"). The Portland run -- 1,684 nautical miles, six and a half hours, three landings -- is Federal's longest and most exhausting.
"It's boring, like driving on the interstate," says Powell, a laconic former crop duster with a blond mustache and a penchant for telling stories. Federal pilots like to talk about the tricks they play on their jumpseat passengers. The 727 has two jumpseats, which are available to company employes who make reservations and don't mind staying up all night, sitting on miserably uncomfortable perches and putting up with the conversation-starved pilots.One trick with female jumpseat riders, according to Powell, involves epaulets, through which the pilots thread the belts of their shoulder harnesses, turn to their passengers and ask, "Hmmm, you don't have any epaulets? FAA regulations require that you use something to hold the shoulder harness on." The pilots huddle together with concerned seriousness and then helpfully suggest that the shoulder harness could be held down by bra straps. It's funny, the pilots say, in the middle of the night.
Along with nearly everyone who works for Federal Express, Powell and his crew spend an inordinate amount of time talking about Fred Smith. The creator of the company, partly because of Federal's in-house television network, has become an icon for his employes. Last October's "Employe Family Briefing," a televised annual meeting combining the format of the Johnny Carson Show with the atmosphere of a faith healer's festival, presented Smith as a sort of demigod of package delivery.
More than 5,000 employes in a Memphis convention center and thousands of others in hotels across the country watched a multimedia salute to Smith. He appeared on a screen amid billowy clouds at sunrise, striking dashing poses as inspirational music blared and Federal jets swooped by. When he finally walked on stage in the flesh -- after being introduced as "our chairman, our founder and our friend" -- he received a standing, cheering ovation.
They love Smith because he pays relatively high wages (higher than average in Memphis), he thinks big (right now he's considering using dirigibles for package delivery to the West Coast and SST's for delivery to Europe) and his growing company hasn't had to lay off employes. Smith and his company are fiercely antiunion, using high wages and morale-boosting gimmicks like the televised family briefing to fight off organizing attempts by the Teamsters Union.
Smith, the prematurely gray Wunderkind who invented the industry his company dominates, says he's confident Federal will continue growing. The company's last reported quarterly earnings showed revenues up 41 percent for a similar period in 1979 and profits up 25 percent. Federal lays claim to about a third of the overnight package market. Emery Air Freight Corp., Federal's major competitor, has about 19 percent; United Parcel Service, 16 percent; Airborne Freight Corp., 8 percent; passenger airlines, 4 percent, and the rest (including the Postal Service's overnight delivery service) 23 percent. Federal is the only major small-package service that owns its own fleet of jets, an enormously expensive investment for an upstart company. The fleet of 55 jets is valued at more than $285 million. It also owns 2,500 delivery vans.
"We are so much bigger than anybody else," Smith says. "It would take a corporate behemoth to muscle its way into our business."
Landing gear grind down out of Nicole at 8:31 Pacific Standard Time as Powell and his crew prepare to land in Portland. It's an atypically bright morning in the Northwest. The Columbia River shimmers below, strands of fog curl in the wooded foot-hills of the Cascades and off to the right stands snow-streaked Mt. Hood. Rush-hour traffic clogs the suburban freeways. An hour earlier, the fog in Seattle had dissipated at Boeing Field to permit a routine delivery of 12,400 pounds of packages. Before landing in Seattle, Powell said, "Oh boy, I'm tired. This is hard." His copilot nearly nodded off to sleep.
On the ground in Portland, the pilots take a taxi downtown to the Portland Hilton for sleep and a 36-hour layover. Nicole will be refueled, serviced and flown back to Memphis this afternoon by a crew that arrived two days earlier.
The monkey from Mclean did not die for naught. His kidneys, having traveled 2,724 miles overnight, are delivered at 10:04 by van to the Oregon Public Health Lab. CAPTION: Cover photo, no caption; Pictures 1 through 3, The workhorse of the Federal Express fleet is the Boeing 727 which can haul 40,000 pounds of packages. Such pay-loads can mean a profit of $120,000 on each flight. The entire fleet of the cargo airline, including 19 727s, 32 Dassault Falcons and two giant DC-10s, descends each night on Memphis for a complex package sort. The sort, which takes place inside the Hub building involves rerouting more than 90,000 packages a night.; Pictures 4 through 6, In the cockpit of their 727, which they fly only at night, are captain Gene Powell, flight engineer Mark Gatling and copilot Don Grant. Federal Express pilots say their fly-by-night hours are the most painful part of their job. Yet they are paid well for their troubles, with salaries totaling $196,000 a year. Fred Smith, founder and chairman of the board of Federal Express, is himself a jet pilot who flew 200 combat missions in Vietnam. Federal Express employs the youngest DC-10 captain in the United States: Terry Crosby, 35, who makes $105,000 a year. photographs by Bill Snead