With more than 270 million in operating expenses last year, Forward Air spent around like 1 million day in simply to run its air freight network, not big financial barrier for large LTL carrier but daunting investment in the smaller world of airporttoairport trucking. The Colography Group, Georgiabased research and consulting firm, says in more than percent of all overnight air shipments and percent of secondday air shipments moved less than miles. But customers are becoming more educated on how this works.
On the one hand, forwarders and truckers compete, but more and more air cargo companies are using the LTL carriers as an assetbased resource. There seem to be plenty of shipments on the margins, ready to move either way. Pilot also has truckload division, called Pilot ETS, with brokerage authority that they use to book truckload capacity while paying the carriers directly. Forwarders and truckers are customers and competitors. What you have to do is solve customers problems.
The domestic heavyweight air freight market is roughly 5 million of which we estimate that over 2 billion is deferred air freight, said Jon Langenfeld, an investment analyst with Robert For someone to come up and be huge competitor they are going to have to come out of the box with full service that mirrors what Forward Air does. Brian Clancy, principal in the Arlington, Va.based MergeGlobal consultancy, says Forward Air has grown because they the best customers. There is no reason you cant replicate the same model.
Over the last several years, weve seen traditional air freight business moving to the ground carriers, said Gene Malcolm, senior executive vice president at Pennsylvaniabased forwarder Pilot Air Freight. As we look at the future, it is going to be harder to differentiate between air and truck services. Thats because ONeil sees the larger trends in logistics bending toward surface transportation. business collapsed few years Pilot also has truckload division, called Pilot ETS, with brokerage authority that they use to book truckload capacity while paying the carriers directly. Timeintransit being equal, its who youre talking to, really.
The airline essentially was saying if you cant trucks, you might as well drive them. Its forced us to offer our own ground services. Pilot created division for ground service that manages the forwarders own dedicated trucking system and the forwarders use of outside services. That be true from perception standpoint, said ONeil. When you look at what their customers charge for air freight, the relative price elasticity of airlines and forwarders means that the trucking component is relative sideshow in the total economic equation.