YELLOW FREIGHT FOLLOWS COMPETITORS INTO OVERSEAS AIR CARGO BUSINESS

YELLOW FREIGHT FOLLOWS COMPETITORS INTO OVERSEAS AIR CARGO BUSINESS

Yellow Freight System Inc., the nation's largest less-than-truckload carrier, is getting into the international air freight forwarding business.

The Overland Park, Kan., company said it will provide a one-call, single- waybill service for shipments more than 500 pounds. John Dauernheim, general manager for trans-Pacific and global air operations for Yellow, said the company is committed to starting the service in the second quarter of 1996 with deliveries to Europe. Service to major markets in the Pacific Rim will start soon after that.Yellow's two major competitors, Consolidated Freightways Inc. of Palo Alto, Calif., and Roadway Services Inc. of Akron, Ohio, both operate full air cargo carriers. CF owns Emery Worldwide, an integrated carrier that has become a profitable operation after years of losing money. Roadway Global Air, formed two years ago, is still losing money.

Mr. Dauernheim said Yellow has no intention of flying its own planes.

"I think we've learned from experience of one of our competitors. It's too asset-based," he said, referring to Roadway. "We specialize in over-the-road trucking, and that's what we provide very well."

Yellow is teaming with Koninklijke Frans Maas Groep NV of the Netherlands to handle deliveries in Europe. It has sent less-than-containerload freight by ocean carrier to Frans Maas since 1992.

The company expects to start LCL ocean service to the Pacific Rim early next year, departing from Long Beach, Calif.

It will team with AWT World Transport in Hong Kong, Springboard in Thailand and Thong Soon in Singapore, and plans to use those partners when it establishes air service to the Pacific as well.

Mr. Dauernheim said Yellow will provide time-definite deliveries but will be slower, and cheaper, than traditional freight forwarders.

"We want to use the Yellow Freight ground network as much as possible," he said. "Where integrated (carriers) fly directly from major cities, we'll truck it to a major gateway city." Yellow plans to use New York, Chicago, Los Angeles and perhaps Memphis and Houston for those gateways.

Douglas Rockel, an analyst with Furman Selz in New York, said Yellow's offering should be competitive, even if it is slower than some of the competition.

"The idea is not to capture freight just to put it on their trucks. It's to offer a reasonably priced service," he said.

Mr. Rockel endorsed Yellow's decision not to start flying its own planes.

"There are a lot of people in the market," he said. "Given the investment they've got to make in their regional LTL organization, I would prefer to see Yellow follow that course than start an international air freight company."