The evolution of Burlington Northern Air Freight in the past 49 years
BURLINGTON Northern Air Freight, which was started in June 1972 as a subsidiary of the Burlington Northern Railroad, served 10 cities at its launch as an air freight forwarder specialising in shipping heavy materials within the US using contracted cargo space on commercial lines, reports New York's FreightWaves
26 April 2021 - 19:00
In 1982, the company was acquired by Pittston Company of Stamford, Connecticut. (Pittston would later change its corporate name to Brink's.) In 1986, Burlington Northern Air Freight was repositioned as an overnight or expedited air freight provider. Therefore, Pittston changed its name to Burlington Air Express. In addition, Burlington acquired WTC Air Freight in 1987.
In the early 1990s, many industry watchers thought that Pittston would seek to sell the underperforming subsidiary. Burlington Air Express' largest issue was its overdependence on business from the auto industry, which is very cyclical. At one time the auto industry comprised 20-22 per cent of the company's US revenue stream.
However, by the end of the third quarter of 1996, Burlington Air Express had become a US$1.4 billion global cargo express and logistics company. In addition to a variety of air express services, it provided international air freight, ocean forwarding and customs brokerage.
At that time, Dennis Eittreim, the company's president for the Americas, said: 'Several things have contributed to our success. Most importantly, we achieved critical mass in our domestic operations and have been able to even out the highs and lows in our business.'
By late 1996 the automotive industry contributed only 5 per cent of Burlington Air Express revenue stream. Beginning in 1993, Burlington Air Express built its presence in ocean freight forwarding via small acquisitions and grassroots marketing. Although this sector generated only a small amount of the company's overall revenue, it allowed Burlington Air Express to promote itself as a total logistics provider, which contributed to the company's customer base.
In the decade after Pittston acquired Burlington Air Express, its closest competitor was Emery Air Freight (later Emery Worldwide). But in the early to mid-1990s, Federal Express and UPS were becoming bigger and more competitive.
'You would have to have your head buried in the sand not to know people are coming after you,' Stephen R Dearnley, president of Burlington Air Express' international operations said in an interview at the time. 'You have to be more flexible, offer a wide range of services to be competitive. That was the motivation for getting into ocean freight forwarding. You have to be a transport agency rather than just in the point-to-point express business,' he said.
Pittston changed the name of Burlington Air Express for a second time in 1997. BAX Global was chosen to reflect the company's global reach. The company's headquarters was also moved to Irvine, California. BAX Global's business focus was on air freight, as well as ocean, warehousing, ground and logistics. At the time of the name change, the company had grown to 500 offices in 119 countries and employed over 5,000. Moreover, the company generated roughly $1.5 billion in annual revenue.
BAX Global also made two acquisitions in 1997. It bought Cleton & Co, a company that specialised in logistics, warehousing and distribution that was located in the Netherlands. Its second acquisition cost $76 million; it acquired Distribution Services Ltd to further expand its global reach.
Schenker & Co was founded in Vienna, Austria, in 1872. Schenker became a subsidiary of Deutsche Bahn (DB), the German national railroad, in 2003, when DB acquired Stinnes AG DB Logistics, the transportation and logistics division of DB, acquired BAX Global from Brink's on January 31, 2006. The cost of the acquisition was $1.1 billion.
Under DB, BAX Global operated as a transportation and supply chain company in the US, Canada and Mexico. Then in 2011 DB Logistics announced that it was refocusing its North American operations and ending the majority of its air freight transactions. The German third-party logistics company said BAX Global was eliminating its dedicated domestic air cargo fleet and would operate a 'non-fixed asset' model. In other words, it would go back to the model used by Burlington Northern Air Freight in the 1970s - booking customers' freight on other cargo carriers or chartering aircraft as needed.
As part of its North American restructuring, Schenker said it would focus on managing transportation for a smaller pool of shippers. 'As a result of the prolonged recession and spiking fuel prices, more and more of our customers are opting for expedited ground-based solutions instead of domestic air freight, and they are looking for partners that can provide transportation management services rather than transactional transportation,' Heiner Murmann, chief executive officer of Schenker Inc, said in a statement at the time as reported by FreightWaves' American Shipper.
Schenker also said the closing of the domestic air network would not impact its international freight forwarding or warehousing operations. 'We remain committed to maintaining a strong presence throughout the Americas, including the US, and this realignment will help us achieve that goal,' Mr Murmann said.
Until that announcement, BAX had operated a fleet of 20 airplanes from a 279,000-square-foot hub in Toledo, Ohio. About 700 employees at the hub had sorted about 2.4 million pounds of cargo each day. Schenker also announced at that time that the hub was also being closed. Following the restructuring, BAX has moved US cargo on trucks.
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