AIRBORNE SETS SIGHTS ON DISTRIBUTION HUBS ABROAD

AIRBORNE SETS SIGHTS ON DISTRIBUTION HUBS ABROAD

Airborne Express, in a bid to strengthen its share of high-tech and computer traffic, intends to set up major new inventory hubs in Europe and Asia.

The hubs, to be opened by next year, would make it possible for the Seattle-based express company to manage corporate inventories and provide overnight deliveries for such global companies as International Business Machines Corp.The new hubs would provide an international version of the inventory management system Airborne uses at its domestic hub in Wilmington, Ohio, said Ken McCumber, a company vice president.

Airborne stores inventories for 70 companies at its privately owned airport in Wilmington. The company uses those inventories to provide 10:30 a.m. delivery of computers, critical parts, medical supplies and chemicals for orders logged as late as 2 a.m.

Airborne said it is creating a new subsidiary, Advanced Logistics Services, to set up similar hubs at sites owned by its partner delivery companies overseas. Airborne would not own the hubs, but would market Airborne management of inventories at them to high-volume corporate customers.

David Campbell, an analyst at Scott & Stringfellow in Memphis, said Airborne's decision to go ahead with international inventory hubs, particularly in Asia, is connected to its new contract to handle IBM shipments to Asia.

Airborne has handled IBM express shipments to Europe, the Middle East and Africa for several years. On Friday, the company also took over IBM's express shipments to the Pacific Rim countries.

"Computer manufacturers are chasing the cheapest labor on the planet and the best place for them today may not be the best place tomorrow," said Kent Waggoner, a director at Advanced Logistics Service. "They need somebody in the pipeline to hold the inventory and then get it distributed as efficiently as possible."

Mr. Waggoner said the Airborne hubs will serve that function. Airborne said it's evaluating European hub sites in Belgium, the Netherlands and Luxembourg. Mr. Waggoner said it would be premature to disclose hub cities being considered in Asia.

Once the overseas hubs are established, Airborne expects to set up a major inventory management hub on the West Coast, he said. The company also is studying whether a new East Coast inventory hub may be warranted.

With the expansion, Airborne in the next few months expects to more than double the number of companies for which it manages inventories, Mr. Waggoner said.

Kevin Murphy, an analyst at Morgan Stanley in New York, said that what Airborne is doing is part of a trend toward express companies providing global logistic services.

"As economies around the world become more closely linked and more international, manufacturers need a company that can provide just-in-time inventory and distribution," he said. "It's the new growth niche for air freight."

Several express companies and freight forwarders already have some type of third-party inventory systems, he said, but Airborne's main competition is likely to come from systems run by Federal Express Corp. of Memphis and Fritz Cos. of San Francisco.