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    Eagle Has Eye For Business

    - Air Commerce Article, By Ira Rosenfeld, November 25, 1996

    
    
    
    
    
    
    
    
    The few days I spent in Richmond, Va., 
    
    this month at the Scott & Stringfellow Inc. Logistics and Transportation
    
    Seminar proved an eye-opening experience. 
    
    

    The brokerage and investment firm is one of the few in the nation that allows reporters to attend sessions where they have gathered company officials to meet with investors and analysts.

    A steady stream of suits from some 18 air, truck and freight forwarding companies marched up and back from the podium with slide shows, annual reports and bright projections.

    There was enough fertilizer in the room to cover Yankee Stadium.

    'Badly Undervalued'

    With a straight face, one all-cargo airline executive told would-be investors that his company's stock is "badly undervalued." What he did not say was that his company has failed to meet its own projections for three straight years and has had flat earnings since 1994.

    After another airline - this one a Western regional passenger outfit - finished its presentation, one analyst shook his head and said, "I don't understand how or why you are still in business?" Mike Tyson looked in better shape after his date with Evander Holyfield than the company's chief financial officer did trying to bounce off the mat from that blow.

    Eagle has eye for business

    Into this warm, wonderful world of finance moved Donnie Roberts, chief marketing officer for Eagle USA Airfreight.

    A onetime tennis pro and a former employee of McLean Trucking, Mr. Roberts has been with Eagle USA since the company took off in 1984.

    His Western boots, broad belt and Texas drawl so thick you could slice a cactus with it suggested that he has been in Houston, the company's headquarters, at least that long.

    Freight forwarders in the room were not pleased to see either Mr. Roberts or Eagle USA in Richmond. It seems the boys from Houston have a nasty habit of taking their customers.

    "No gimmicks or tricks," Mr. Roberts said. "We just move the freight."

    Actually, there is something else involved here. The key to the company's success is it moves freight that nobody else is moving.

    "Sell, service, and collect," said Mr. Roberts, whose rapid-fire delivery tells you this is one salesman who would rather rush the net then sit back at the baseline. "Look, moving freight isn't rocket science. Anybody can move a box at 2 o'clock in the afternoon."

    True, but where Eagle rides to the rescue for shippers is at two in the morning.

    "When it is after seven at night and the last Fed Ex plane has left for the day, that is where we come in," said Mr. Roberts.

    Eagle USA, which moves 60% of its freight on the ground, will pick up freight in those off-hours and guarantees delivery the next day in the United States. The secret is that it pays a premium price to the airlines to move it. Their customers, in turn, pay them premium prices.

    Still, they may not make a lot on such deliveries, many of which other forwarders and integrators would turn their nose up to complete. Eagle has used its unique services as the key to unlocking other business.

    "When you prove to a company that you can do the impossible they feel comfortable giving you their regular business," Mr. Roberts said.

    An aggressive sales force doesn't hurt your chances either.

    Among Eagle USA's 4,000 customers are Caterpillar, Intel, General Motors, Hewlett-Packard, Compaq Computers, Glaxco, Northern Telecom, and Seagate Technology.

    While everybody in the industry is pushing themselves as the next giant international freight forwarder, with representation in 100 or 200 countries, Eagle USA is content to keep a primarily domestic operations. Ninety-five percent of its business takes place within U.S. borders, with some 37% of its forwarding revenue coming from same-day or next-day morning deliveries. It also focuses on shipments of more than 70 pounds, which keeps it out of the direct line of fire from Federal Express and United Parcel Service.

    Better profit margins

    The formula works. The company's pretax profit margins run about 10% of sales. Compare that with Fritz Cos., the giant international freight forwarder, whose profit margins run at 5.8%.

    Today, Eagle USA boasts 47 terminals, a number it says will rise to 70 by the end of 1998.

    The company also has added local pickup and delivery and truck brokerage services in some of its terminal cities to complement its air freight services.

    While the average weight per shipment has increased to over 610 pounds, net revenue has kept to about 22 cents a pound, a measure of the company handle on yields and profitability.

    The company's stock, which is traded on the NASDAQ, has been selling at $26.75 a share of late, flirting with its 52 week high. [Eagle stock split 2-for-1 in August when it hit $38.50, following IPO price of $16.50 in November 1995.]

    Analysts are keeping a close eye on the stock. Eagle USA's competitors would be advised to keep a close eye on their customers, especially after dark.



    
    
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