and Africa with a spot by Scholz & Friends, Hamburg, featuring a South African vintner (far l.). Federal Express Corp. (top) is having trouble drumming up business in Asia and Europe; the latter region is where rival courier TNT Express (r.) earns 70% of its revenue. COVER STORY;DELIVERING A MARKET BATTLE;COURIER WARS DARKEN SKIES OVER EUROPE, ASIA AS FEDEX, TNT, DHL BATTLE FOR DOMINATION

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Instead of Spitfires, Zeros and Messerschmitts, the dogfight in the skies over Europe and the Far East today is being waged with PowerShip from Federal Express Corp., SkyPak from TNT Express and flying elephants from DHL Express International.

Marketing tools have replaced the Red Baron's primitive guns. Instead of underground bunkers, battle plans are mapped out in meeting rooms of the international couriers and their advertising agencies.

But the goals of the leading air cargo carriers are the same some countries had 50 years ago-total domination of Europe and Asia.

And that takes marketing.

"I believe that the largest growth in the future for the carriers will come from overseas and more specifically Asia," said David Guthrie, analyst at Morgan Keegan & Co., Memphis.

If the international couriers were in Major League Baseball's National League East, DHL International would be in first place with 37% of the market followed by TNT, FedEx and UPS.

And, no matter how successful a global courier is at home, it still can have international problems.

FedEx is in the middle of a trade war between Japan and the U.S.

UPS, even though its overall financial position is strong, still is a money loser overseas to the tune of $280 million last year and more than $1 billion since it began its big push in Europe in the 1980s.

TNT, an Australian conglomerate that reaps $300 million annually from TNT Express alone, may be creating some consumer confusion with SkyPak, a joint venture with foreign post offices.

DHL, which some classify as an enigma, lacks capital to build infrastructure as FedEx, TNT and UPS are doing. It seems willing to pay the price for that.

"DHL is set up for tax purposes and is undercapitalized," said Greg Smith, analyst at Colography Group, Atlanta. "It operates as a forwarder and concentrates on letters and documents instead of a full menu of services."

And they all play "What's My Line?"

"FedEx and UPS may be household names in the U.S., but not outside of it," said Larry Bloomenkranz, VP-international advertising for UPS, London. "Here, because of the many foreign carriers, we are unknown."

Mr. Bloomenkranz partially attributes that to the fact UPS only started advertising overseas six years ago. Its ads are more country-specific than the homogenous ads seen in the U.S. or Asia.

FedEx, after an abysmal start in Europe, downsized there in 1992. It now reports profits overseas for six consecutive quarters as well as a fourth-quarter international operating profit of $34.4 million in 1994, compared with $20.4 million for 1993. Fiscal 1994 operating income for FedEx's international segment was $125.6 million, compared with a loss of $29 million the year before.

Mike Glenn, senior VP-worldwide marketing, customer service and corporate communications for FedEx in Memphis, said the company's decision to downsize was based on the number of companies that existed in the market.

"The European intracountry market isn't developed from an express standpoint as quickly as in Asia," said Mr. Glenn. FedEx is having a hard time convincing European businesses that they need overnight delivery service.

UPS has another problem.

Company officials in Atlanta told Advertising Age that its international problems weren't anything another 500,000 packages wouldn't cure. Still, they admit UPS will lose slightly more money overseas again this year.

"UPS is pouring lots of money into Europe and isn't getting the return," said David Baker, planning director for J. Walter Thompson Europe, the London-based agency for TNT Express for global advertising. TNT also uses Bozell in Europe for below-the-line services.

"FedEx didn't work out in Europe, and UPS is finding it difficult to get critical mass over here. You need a good infrastructure, then you market. And TNT has already built that up," said Mr. Baker.

TNT Express gets 70% of its revenue from Europe and it has been doing business there a long time. "We grew up here," said Anton Aucamp, senior VP-marketing for TNT Express. And FedEx and UPS didn't.

Mr. Guthrie believes FedEx's problems in Europe were simple.

"FedEx tried to export what they had in the U.S. and found the market not what they thought," he said. "In the U.S. you FedEx something. But in Europe, no one ever heard of them," figuratively speaking.

Today, FedEx's niche overseas is transcontinental service rather than intracountry.

And now the Far East, a place where FedEx is building its international hopes, is giving it problems.

The latest flap between the U.S. and Japan over aviation rights involves many flights to the FedEx hub in Subic Bay, the Philippines. Industry analysts say at stake is which country will control the air cargo industry.

FedEx has constructed an air cargo hub in the Philippines and Taiwan. Those bases would allow it to erect an intra-Asian air cargo network in the Pacific reaching from Korea to Australia and from Indonesia to Fiji.

But Japan does not allow FedEx to fly between Japan and the Philippines. The U.S. is retaliating by cutting Japanese air cargo flights by Japan Air Lines and Nippon Cargo Airlines to and from the U.S. in Hong Kong, Indonesia, Singapore, Taiwan and Thailand.

Also, Nippon Express and Kintetsu World Express have formed a joint venture in Japan-Global Air Cargo Service-to compete with FedEx in the Far East. Kazuhiko Hirano, managing director for Global, said the company, with offices in Tokyo and Osaka for domestic business, has no overseas ambitions at the moment.

"This is far from over," said Mr. Smith. "FedEx spent $880 million to buy Flying Tigers just for these rights."

Morgan Keegan's Mr. Guthrie said FedEx's international area is the strongest part of the company, and that international business is getting the attention of the integrated carriers. On the other hand, he said, UPS-in response to Fed-Ex-also will continue to beef up its overseas infrastructure.

"If they don't, FedEx will be so far ahead they will never catch them."

In the marketing arena, Mr. Guthrie and Colography Group's Mr. Smith said FedEx is the leader over UPS, even though the latter is improving and becoming more aggressive.

Many believe two words give FedEx a huge marketing advantage. "The world says `FedEx it,'*" said Mr. Guthrie, saying that UPS' marketing flaw is that while it has good ads and some brand recognition, it isn't perceived by small companies to be as easy to use as FedEx.

Part of what makes FedEx so user-friendly is its technology. PowerShip, computer hardware, and FedExShip, tracking and shipping software, allow customers to program their own pickups and track their own packages. The service is available in Europe.

At the same time that BBDO Worldwide, New York, started promoting FedExShip, UPS reacted with a similar announcement but has yet to come up with a product or any marketing. UPS' MaxiShip has a computer software program called MaxiTrak that can only track packages.

"When FedEx does something in marketing, others try to do it as soon as they can, even if they're not ready," said Mr. Guthrie. Experts see FedEx as a natural marketer. "It continues to be admired by all in relation to marketing and knowledge," said Mr. Smith.

Mr. Glenn said FedEx is in a different business in Europe than in the U.S. He also admits his company's brand awareness is different overseas than in the U.S. "Europe dictates different marketing tactics," he said. "In Europe the heavy emphasis is on individual selling, some print and limited TV."

John Flick, international public relations manager for UPS, said his company's marketing is customized market by market. "The way we present Italy is different from the way we present Spain," he said. "There are major cultural differences, and in Europe you have to understand those."

Mr. Flick said UPS learned its European lesson the hard way. The company held export seminars in London that involved presentations by experts in that field. It didn't work because the majority of manufacturing in England is north of London in Birmingham and Manchester.

UPS is about to introduce letter boxes in Asia, and Mr. Flick said that also will be a challenge. "Culturally, that has been [more] difficult in Asia rather than in Europe because Asians like to put letters in someone's hands to pass it off," he said.

Mr. Bloomenkranz said UPS' ads are tightly directed at each country and its needs. "We fine-tune ads to certain givens in some cultures," he said.

As UPS does, Mr. Baker said TNT also tailors campaigns to specific markets. He said SkyPak's marketing theme is that it offers a distinct advantage because TNT has an emotional relationship with customers that Fed-Ex and UPS don't.

TNT describes SkyPak as a simple express delivery system whose customer base is small- and medium-size businesses too expensive for the larger carriers to reach.

But because SkyPak combines the resources of TNT plus 51,000 retail outlets at post offices, where it can be purchased, Mr. Guthrie believes TNT muddies the consumer waters.

He points out that TNT continued to market its own TNT product while still in charge of picking up and delivering other express products. "Am I dealing with TNT or with Canada Post?" he asked. "This creates confusion and can't continue to exist."

Mr. Aucamp denied the confusion and said SkyPak's simplicity sets it apart from the others. "There are four different preshaped sizes and simple pricing in terms of zones in America, Europe and Asia," he said. "The simpler the better."

DHL defines market sensitivity as allowing decentralized marketing operations. Marketing Manager Dean Christon said, "We don't make decisions out of San Francisco or Brussels. Local people know how to run their business."

And elephants, unlike pigs, can fly if you believe DHL and the Campaign Palace, Sydney. The agency produced DHL's new $3 million campaign, which broke in nine Asia/South Pacific countries in April. A 30-second TV spot called for an elephant, Siam, to load the company's Jumbo Box on its back, then "taxi" out of the hanger and down the runway for takeoff.

The Jumbo Box moves DHL into the lower end of heavy express where the main competition is Airborne, Emery Worldwide, Baltrans and Boltt International.

John Pearson, Australian sales manager for DHL, said Jumbo took DHL into new markets and broke a new category, offering a compact box delivered door-to-door.

The couriers' common thread is their attempts to develop a global system through marketing.

"They have to," said Mr. Guthrie. "You can't just do Europe and the U.S. You have to do the world."

Geoffrey Lee Martin contributed to this story.

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