Pilot Air Freight Corp. Business Information, Profile, and History

Company Perspectives:

As your transportation and logistics expert, we equip you with everything you need to move your cargo--delivering your shipments by air, land or sea anywhere in the world.

We offer customized logistics solutions for just-in-time delivery--like our Merge and Deliver service and our Inbound Logistics Service, to control your inbound product flow.

At Pilot, we focus on every shipment and we pledge to you the highest level of on-time performance, reliability and cost effectiveness.

History of Pilot Air Freight Corp.

Pilot Air Freight Corp. is a leading U.S. freight forwarder and the largest privately owned forwarder in the world. Traditionally, it has specialized in heavy commercial cargo. Pilot operates through a network of 65 stations. It has a strongly domestic focus; international freight makes up 15 percent of business. The company's non-asset-based business model has been validated in several economical downturns. Pilot aims to set itself apart through flexibility and superior customer service.

Origins

Pilot Air Freight began operations in 1970 at the Philadelphia International Airport. Freight forwarders like Pilot did not own their own aircraft, but booked available cargo space on passenger and freight airlines. One newspaper likened it to a "travel agency" for cargo.

The company's future CEO John Edwards started with Pilot by opening the firm's branch in Buffalo, New York, in 1972. He became Pilot's president and CEO in 1979. Edwards was a native of Buffalo, New York. He owned the company, then called Pilot Air Freight Inc., through a partnership with two of his cousins.

Franchised Growth in the 1980s

Revenues reached $1 million in 1974, according to the Philadelphia Business Journal. By 1979, sales were $7 million. After the Federal Trade Commission ruled that Pilot's "agencies" in Boston, Chicago, and Los Angeles were in fact franchises, the company began building a proper franchise network. This led to rapid growth. Revenues were approaching $12 million in 1980.

In late 1983, Pilot created a subsidiary to form international joint ventures. By 1985, the company had 55 franchises and sales of about $55 million. Sales were $78 million in fiscal 1986. One analyst ranked it the fifth largest player in the heavy cargo industry. In 1987, Pilot tried to acquire publicly traded Northern Air Freight Inc. of Seattle, but was rebuffed.

The Pilot Perishables joint venture was launched in the mid-1980s with Flying Fresh International of San Francisco. The door-to-door service shepherded fresh fruits, vegetables, seafood, and meat through the customs process.

Former Braniff Inc. President Ron Ridgeway opened Pilot's Dallas franchise, one of the company's largest, in 1987. By 1989, Pilot had revenues of about $80 million a year, with perhaps 10 percent of that from international business. Pilot had 62 agents in the United States, 70 percent of them franchised, and 16 in foreign countries.

New Horizons, New Leadership in the 1990s

Pilot initiated a quality program in 1990, when sales were $90 million. The company signed up its first international franchisee, RMF Ireland Ltd., early in the year. Pilot pitched its flexibility as a main selling point, noted an article in Sales & Marketing Management on long-term sales efforts. Besides embracing heavier shipments, the company offered 24/7 pickups and deliveries, making it ideal for plants running two or three shifts a day.

By focusing on after-hours customer service, Pilot was able to develop a niche in the sports business, reported the Journal of Commerce. It was the official forwarder of major league baseball umpires, whose uniforms had to be shipped overnight to various stadiums across North America, sometimes through customs.

The involvement in baseball, which began in the late 1980s, led to finding a new leader. Richard Phillips, a trial attorney by profession and lawyer for the Major League Umpires Association, became Pilot's counsel in 1990. He was named chairman of the company in 1994 after orchestrating a restructuring and refinancing program and acquiring a 50 percent share of the company. In 1995, Phillips replaced John J. Edwards as president and chief executive officer.

Support for the Gulf War was also a significant boost to business in the early 1990s. Pilot was already the military's largest civilian forwarder, noted the St. Louis Post-Dispatch.

Revenues were $78 million in 1993, though the company lost about $3 million. Revenues grew to $94 million in 1994, producing a profit of $4 million. Next-day business made up half of sales and 60 percent of Pilot's shipments weighed more than 300 pounds, noted AirCommerce. Pilot reported another banner year in 1995, as revenues exceeded $100 million. International business boomed, and import revenues more than doubled. A sea freight division, Pilot Marine Services, was formed during the year.

In early 1996, Pilot implemented a dial-up shipment management system called PACE. Two years later, the company signed on to have Seattle's ITM Corp. supply a web-based scheduling system. In 1999, Pilot deployed a "Shipping Verification" system designed with North Wales, Pennsylvania-based Integrated Productivity Systems, Inc.

Pilot opened more stations in the southeastern United States in the late 1990s to attract manufacturing-related shipments, reported Journal of Commerce. The company was enjoying continued double-digit growth domestically.

2000 and Beyond

Business boomed for Pilot even during the slow economy after 2000. The company had about 1,500 employees and 65 stations in the United States. The biggest ones were in Boston, Los Angeles, and Atlanta. In late 2001, the company opened a new 8,040-square-foot warehouse facility near Baltimore, Maryland.

Revenues were $217 million in 2002 and business was growing at an enormous rate. Booming catalog and internet shopping contributed; Pilot officially launched a home delivery service early in the year. The company already had made 11,000 home deliveries for customers such as Sharper Image and QVC in 2001. Pilot embraced items that were too heavy for UPS.

Home delivery gave Pilot the opportunity to offer more levels of service. Phillips told Air Cargo World the company could even assemble items such as treadmills in buyers' homes.

There was also the military-related business. Phillips told the Journal of Commerce in April 2003 the company was shipping more than two million pounds a month from California to Delaware for the Department of Defense.

Company Chairman, President, and CEO Richard G. Phillips became Pilot's sole owner in January 2003 after buying out his partners. He had previously owned 50 percent of stock.

Buoyed by Iraq-related military shipments, Pilot posted a record year in 2003, with 839,423 shipments, up 26 percent, that totaled 420.3 million pounds in weight. Sales reached $250 million. Shipping for Internet purchases continued to be a positive factor.

A New Alliance in 2004

To match the global capabilities of large forwarders like DHL's AEI Danzas, Pilot formed a global alliance with 50 other independent forwarders around the world. Pilot was the only U.S. member of the World Freight Alliance, which included Aramex in the Mideast, EAS Transportation in China, Two Way Forwarding and Logistics in Ireland, and Cargo Partners in Eastern Europe, reported Traffic World. Many of these partners had been left without a U.S. connection after DHL acquired Airborne Express. The alliance began operations in December 2003. Pilot opened a station in the Pacific Rim hub of Honolulu in early 2004.

Principal Competitors: BAX Global Inc.; DHL Worldwide Express Network S.A./N.V.; EGL Eagle Global Logistics; Exel Global Logistics; Menlo Worldwide Forwarding.

Chronology

• Key Dates:
• 1970: Pilot Air Freight is founded.
• 1979: Franchising begins.
• 1994: Richard Phillips acquires half of the company and becomes chairman.
• 1995: Revenues exceed $100 million.
• 1996: The PACE online shipping management system is implemented.
• 2001: Pilot begins home deliveries.
• 2003: Richard Phillips becomes the sole owner.
• 2004: Pilot forms World Freight Alliance.