Express giants moving into trans-Atlantic trade

Express giants moving into trans-Atlantic trade

SHORT HILLS, N.J. - Express delivery providers such as FedEx Corp., United Parcel Service and DHL Worldwide will soon "cherry-pick" cargo from the trans-Atlantic ocean trade to create high-value, time-definite, door-to-door service, said Brian Clancy, co-founder of and principal of MergeGlobal Inc.

Companies like FedEx, which provide express delivery services through their extensive inland ground and air networks, will tie in ocean liner services by setting up their own distribution centers near East Coast ports, where they will strip less-than-container load packages from containers for express delivery.

"FedEx and UPS are drilling down for high-value cargo on the Atlantic trades," Christopher Rankin, principal, Rankin Associates, told the Trans-Atlantic Maritime Conference sponsored by The Journal of Commerce Tuesday. "The growth of time-sensitive, high-value cargo eastbound on the Atlantic is very good."

The targets for these premium services are companies such as Dell Computer that maintain high margins by keeping their inventories low, Clancy said.

The market for these services could be as high as 127,000 TEUs, or 2 percent, of the total annual volume on the trans-Atlantic by 2009, Clancy said. Westbound premium services would amount to 88,000 TEUs, and eastbound, 39,000 TEUs. The premium for door-to-door, time-definite services will be as high as 50 percent of standard ocean pricing.

When asked how express delivery services could compensate for the average time delay of one-and-a-half days in trans-Atlantic ocean services, Clancy said the three express services would take "a band-aid approach by making up the delay through the ground and air networks."

Rankin said technological change will eventually enable express services to guarantee shorter trans-Atlantic shipments.