Lower Prices and Earlier Delivery Are Hallmarks of Regional Courier
THE motto painted on the yellow-and-white company trucks reads: ``Driven to deliver.''
Boston-based Eastern Connection Inc., which operates an overnight courier service from Maine to Virginia, has found a niche in the multibillion-dollar business. Rather than compete with Federal Express Corporation and United Parcel Service Inc. nationally, Eastern Connection has concentrated on the Northeast.
``You can look at that ... and say that's a big disadvantage because you're only in the Northeast corridor,'' says Chairman Ted Kauffman. ``But the fact is, it's been our biggest advantage.''
The company claims its success comes from lower prices, earlier delivery, later pickup, and customized services. About half the packages that originate in the Northeast stay there, says president James Berluti.
The philosophy: Why subsidize a package going to Springfield, Ill., when yours is going to Springfield, Mass.? he asks.
The major carriers usually send packages to a distribution center and then fly them to various destinations. But Eastern Connection has close to 20 distribution centers in the Northeast, so most shipments go directly to their destination, Mr. Berluti says. And Eastern Connection boasts an on-time delivery record of 98.3 percent; Federal Express's is 99 percent.
Demand in Northeast
Berluti and Mr. Kauffman, the company's co-founders, didn't plan to start their own delivery business, Berluti says. Both had been working at Sky Courier, a national overnight delivery service in Reston, Va. After noticing half the business stayed in the Northeast, the two proposed starting a division there. But company executives turned them down. So, with two rented trucks and a handful of employees, Berluti and Kauffman launched Eastern Connection in 1983.
In four months, the company was profitable, Berluti says. It now has more than 300 employees and had sales of $22 million last year. Berluti projects sales will reach $25.5 million this year.
How will Eastern Connection stay competitive? ``The operational service has to be top-notch, but the customer service has to be even better,'' Kauffman says.
Eastern guarantees delivery every day by 9 a.m., Berluti says. Most national carriers don't guarantee delivery until 10:30 a.m. In most northern cities, national carriers stop pickup at about 8:30 p.m.; Eastern will pick up until 11:30 p.m., and 3 a.m. in New York.
Berluti claims Eastern is, on average, 5 percent to 20 percent cheaper than national carriers because it uses ground transportation, not planes. For eight-ounce letters, for example, Eastern Connection charges $7 to $9, depending on volume; Federal Express charges one rate - $15.50 for 10:30 a.m. delivery.
Federal Express is ``in a very different business'' than regional express services, says Shirlee Finley, a Federal Express spokeswoman. The company has 100,000 employees and 31,000 vehicles worldwide.
Eastern has two Boston-based affiliated companies: City Express, a local messenger company with same-day delivery, and Document Management Service, a facilities management firm that operates company mailrooms.
Early delivery a plus
MicroWarehouse Inc., a Norwalk, Conn., computer software reseller, has used Eastern Connection for a year because of its early delivery, says Publishing Manager Noelle Cleary. Even last winter, Eastern Connection missed only one day. ``The only drawback would be that it is all ground transportation,'' she says, noting that New York traffic occasionally delays packages.
Boston-based Daniels Printing Company has used Eastern Connection since its founding, says Michael Linskey, financial printing director. Daniels ships about 90 percent of its freight within New England, New York, and New Jersey, he says, and relies on the 11:30 p.m. pickup and a special 8 a.m. delivery to New York.
Currently, Eastern is moving away from manual tracking and is installing an automated bar code scanning system that should be in use by year's end, Berluti says. ``What's becoming more important is that you need to communicate the status of packages,'' he says. Eastern Connection is also installing automated systems in client mailrooms to help process customer freight.
Berluti says he also sees potential in capitalizing on companies that outsource labor. For high-tech or medical supply companies, for example, Eastern Connection will store supplies in a warehouse, then select, pack, and deliver them to the company.
For now, Eastern Connection will stay in the Northeast market, Berluti says. ``We like the fact that we're a niche player,'' he says, adding that he plans to expand the company to as much as five times its current size before considering another market. However, the company is exploring the Canadian market and is now exchanging packages with an overnight delivering service there.