Server: Microsoft-IIS/3.0 Date: Thu, 20 Nov 1997 17:30:08 GMT Content-Type: text/html Accept-Ranges: bytes Last-Modified: Mon, 03 Nov 1997 16:01:21 GMT Content-Length: 17122 Eagle USA Company News - News Stories (March 1997)
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    Eagle USA is Taking on the World

    - Compass, Northwest Airlines Cargo Newsletter, March, 1997 (Interviews conducted fall 1996)

    
    
    
    
    Talons bared, Eagle USA has wasted no time in capturing domestic market 
    share, setting its sights on international expansion, and vowing to be 
    a billion-dollar company in six more years.

    The young Houston-based forwarder is off to an astonishingly good start. Going public in December of 1995, this air freight phenomenon has peppered the map with some 50 terminals nationwide while maintaining its prudent financial health. Its over-the-counter common stock had its initial public offering at $16.50 a share, rocketed to $40, split 2-for-1, and has marched up to the high-$20's again. Its founder and President, James R. Crane, is a 42-year-old visionary who started the company from scratch in 1984 with a $10,000 loan from his sister. He has recruited a dedicated staff through generous bonus programs based squarely on performance.

    Eagle USA offices never close, serving customers 24 hours a day, seven days a week, thus contributing to its extraordinary service record for a base of more than 7,000 customers. These customers include such giants as Compaq, IBM, Packard Bell Electronics, Nike, Motorola, AT&T, Ford, and General Motors. Its top 25 customers account for more than 38% of its revenues.

    By 1990, Eagle USA had revenues of $12.8 million, and Crane sees no reason why the company won't keep up this brisk pace of growing revenues by 25% to 30% annually. New Eagle USA stations keep springing up throughout the United States, with more planned domestically, in Canada, and in Mexico. It also has its sights set on such European strongholds as London, Paris, Amsterdam and Frankfurt.

    "We have never had to use our line of credit with the banks," he noted. "We are very financially stable, and that has allowed us to get the high tech equipment to compete with the integrators and to get good people. We continue to recruit highly motivated air freight and trucking professionals."

    "We offer employees attractive incentive packages," related Donnie Roberts, who is in charge of sales for Eagle USA. "We place no ceilings on their income. They know that, with us, it's not a job- it's an opportunity. We have not gone the franchise route. We have kept everything company-owned. That way, we keep everyone looking at the bottom line, looking for incentives."

    "We have very little turnover in an industry that is rife with it," notes Roberts. Today, approximately 1,000 people work for eagle USA, and they are all eligible for bonuses that emanate from the performance at their own terminals.

    The company is building a 50,000 square-foot headquarters office near the Houston Airport and will construct a 100,000 square-foot warehouse there as well. The $5-million project will be completed next autumn. It also has room for expansion on the 22-acre site.

    Crane estimates that 60% of its business comes from air freight. For this reason, Eagle USA has developed five tiers of time-based service levels that it can offer to its customers:

    • NFO, Next Flight Out
    • Priority, by noon the next day
    • Next Day Regular, by 5:00 pm the next day
    • Second Day, two days by 5:00 pm
    • Economy, three to five days, by 5:00 pm

    In 1995, approximately 37% of its forwarding revenues came from Next-Flight-Out and the Priority shipments. It also offer special handling, pickups and deliveries, crating and packaging, charters, international service, and in-house customs brokerage. Eagle USA has developed its own information systems that gives customers state-of-the-art information services.

    The company is expert at churning out new locations, with initial start-up costing as little as $30,000 to $50,000, plus staffing. Eagle USA, therefore, can have new terminals in as little as a few months. However, others have taken as long as five years to turn the corner on profitability. Crane noted with pride that the company has never closed an office. Eventually, they have all made money.

    "We have come into some tough markets, but we have never backed out of one. We've always made it work," he said.

    Crane has made exploratory visits to Europe and hopes to set up similar bonus systems for the terminal operations there. Roberts said the international expansions in North America will include Mexico City and Monterrey in Mexico, and Toronto in Canada.

    In 1995, Eagle USA started a customs brokerage operation in anticipation of its international service. It also has started establishing a network of agents in over 100 foreign locations in Europe and the Far East. It now has a licensed customs broker and support staff. The company itself is seeking to become licensed as a customs broker and to expand this aspect of the services it offers to customers.

    At present, Eagle USA does not have a formal rating system for its suppliers. However, Crane said, the firm is also seeking ISO9000 certification and such a reporting system will be a part of the procedure.

    "We see ourselves as a non-asset-based company offering service. Let somebody else own the planes and the trucks. We want to tie up all the variables in between."

    He observed that the forwarder's abilities to compete with the integrators is good business for the scheduled airlines, and they also give the customers greater flexibility for service. The company appreciates the economies of scale in cargo space buying power and enhanced information systems that come with growth.

    "More importantly," said one stock analyst, "the systems are aligned with internal accounting to provide management with substantial, efficient, and timely information on gross revenues, net revenue, and customer basis."

    "We know the total transactional costs down to the penny on every shipment," Crane revealed. The company has daily reports on revenues and gross profits for each station. This allows management to respond immediately if a station does not meet its revenue budget.

    "We have proven that the forwarder can not only exist in this market but can do an excellent job against the integrators," Crane said. "We savor the relationships with Northwest Cargo and the other carriers because we understand how important they are to the equation. We work full-time in developing that relationship."

    "Current annual revenues are going to be about $180 million," Crane revealed. "We are going to do about $12 million of that internationally. The international numbers should double or triple next year. We have hired international staff in our large gateway markets and we are building on that staff."

    Eagle expects to have 90 air freight terminals in place on the North American continent by 1998, with additional expansions overseas. Crane said Eagle will focus first on Europe, although it has agents in Asia and South America as well. "We will develop those lanes first where we can function at the most competitive level."

    Crane noted that customers today strive to cut the number of firms they use. "They don't want to use 15 forwarders anymore," he said. "They'd prefer to use a company like ours that can do their domestic and international air freight, that can make their local deliveries for them and help them manage their logistics systems. Instead of saying to the customer 'Here's how we do business and you've got to fit into this box,' we attack each customer's individual needs."

    Eagle USA tries to avoid small-package business and has a goal of shipping 50 pounds or more. The average shipment is about 580 pounds.

    In the past year, the company has opened 16 new stations.

    The company has five wholly-owned subsidiaries contributing to its success- Eagle Freight Services, Freight Services of California, Eagle USA Transportation Services, Freight Services Management, and Eagle USA Import Brokers.

    Crane had an insurance background in St. Louis, Mo., following his graduation from Central Missouri State University with a masters degree in industrial safety. A friend selling air freight in Houston told him he was earning $38,000 a year. "I told him I didn't believe him. I flew to Houston and made him show me his check stubs," Crane smiled. "I went back home, loaded up a truck, moved to Houston and started selling air freight for Northern Air Freight in 1982."

    He is cautious about mergers, preferring to grow from within. "Big mergers are hard to do. Nobody's done one well, in our opinion," he reflected. "We'd do one if it is a good deal for the company, but our culture's been to build internally and it's worked pretty doggone well."


    Webmaster's Note: This article came from an interview taken in early fall of 1996. Some information is old: As of article publishing date Toronto and Monterrey are open; fiscal 1996 closed at $185.4 million; seven terminals have opened since the interview.
    
    
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