RIGHT-O-WAY PROMOTES TIME-DEFINITE DELIVERIES

RIGHT-O-WAY PROMOTES TIME-DEFINITE DELIVERIES

One air forwarder is betting that air shippers want a full range of service choices beyond simple overnight and deferred delivery options.

Customers are demanding time-definite delivery for third day, fourth day, even seventh day shipments, according to the Southern California-based air forwarder Right-O-Way.Right-O-Way in March started offering a schedule of eight different time- definite delivery options, ranging from next flight out to seventh day. Shippers are given a list of payment options associated with this flexible delivery schedule. But the company concedes that the main selling point at the end of the day remains predictable delivery schedules.

The customer is looking for predictability and reliability of service, said Russell H. Schamun, senior vice president of marketing and sales at Right-O-Way, in an interview.

Right-O-Way guarantees delivery times through a combination of air and expedited truck service. Shipper options in the new schedule include next flight out, next day express before noon, next day before 5 p.m., second day before 5 p.m., and each day thereafter up to the 7th day. The five to seven- day delivery times are handled by expedited surface transportation.

Why would a shipper want a time-definite delivery as far down the road as seven days? Mr. Schamun said that with the spread of Just-in-Time production, manufacturers need parts and components at a specific time, but do not want to keep large inventories on hand.

Furthermore, on long coast-to-coast routes, traditional surface transportation is not always reliable for a time-definite shipment, Mr. Schamun said.

The customer needed something more predictable. He would go to a forwarder and pay a premium for air service, Mr. Schamun added. Customers are now demanding more options than just the costly overnight or second-day delivery and the less costly but less predictable surface transportation service, he said.

By combining air freight, booked on commercial airlines, with ground service, booked on its affiliate trucking company or a contract carrier, Right-O-Way is able to offer up to eight time-definite delivery dates at a sliding scale of prices.

For example, cargo moving on a one-day service from Los Angeles to New York might cost the shipper 80 cents a pound. The price for second-day delivery drops to about 60 cents a pound, with third-day delivery costing about 55 cents a pound, fourth-day 30 cents a pound, and fifth to seventh-day delivery about 20 cents a pound.

At least one forwarder questioned the available profit from offering rates as low as 30 cents or 20 cents a pound. Lawrence L. Rodberg, president and chairman of Irvine, Calif.-based Eden Air Freight and a veteran of the industry, feels extended delivery services place the air forwarder in direct competition with truckers.

There are a zillion truckers out there ready to do this type of business. If you get 20 cents a pound, there's no money in that, Mr. Rodberg said.

He also questioned the cost and logistical problems of maintaining a time- definite service up to a week away. Air freight forwarders don't have warehouses in low-cost areas. We're on airports and near airports, in high- rent districts. It's better for us to get the freight moving, he said.

Although it might appear that the wide range of options Right-O-Way offers will give its booking and operational staff headaches, Mr. Schamun claims the new schedule will bring all departments of the air forwarder closer together.

It helps align the sales and marketing team with the operations people, he said. With time-definite service, they're selling exactly the same thing.

Mr. Schamun said Right-O-Way is not experiencing any logistical problems, and has maintained a 93 percent on-time record on its more than 28,0000 shipments since introducing the new schedule on March 21. That's phenomenal for a new product, he said.

The heart of the company's pricing and service option list is a zip code directory. The manual, with all zip codes across the country listed, outlines time-definite delivery options and includes notes on possible extra charges for hard-to reach destinations.

The zip code directory serves as a guarantee to shippers that Right-O-Way is offering time-definite delivery and is holding itself accountable for performance, Mr. Schamun said.

Some of the company's customers include the film industry, which is using the expanded delivery options for the distribution of new releases, high-tech companies, and a variety of other shippers who want to maintain predictable service but downgrade delivery time by a day or two to save money, he said.

Mr. Schamun said Right-O-Way would not sacrifice service for cost. We don't sell price. We sell service, he said.

Forwarders who compete only on the basis of price eventually undercut each other until they reach a non-compensatory price for their services, he added.