Staying home: Integres Global Logistics

A year ago, Integres Global Logistics made a splash in the air-cargo industry by announcing that it provide small and medium shippers with global access to multiple carriers. It also said it planned to book shipments to Europe by early this year.

So far, however, Integres hasn’t moved far beyond its initial role as a domestic forwarder. The joint venture of Roadway Express, United Airlines and Unisys Corp., is attracting most of its business from Roadway Air, a subsidiary of Roadway Express.

Jim Hartigan, president of Integres, said the company always intended to concentrate initially on domestic service. “When you put a business plan together and when you implement it, you find that customers start driving you to meet their requirements,” he said. “What we’re seeing from customers is a need for domestic.”

Integres hasn’t ruled out expansion beyond North America. “We fully expect Integres to be international,” said Roger Gibson, who succeeded Hartigan successor as vice president of cargo at United after Hartigan left to head Integres. Gibson said that although United’s business with Integres has been “microscopic,” that’s mainly due to turnover in the airline’s corporate sales group. “It’s still a product line that we’re evolving. It hasn’t taken off for us to the degree that we would have liked.”

When Integres was formed last year, it said UTi Worldwide, a global logistics provider, would be its international fulfillment arm. But so far, UTi, like United, has done little business with Integres. “Roadway’s investment had a lot to do with this,” said Mike O’Toole, whose title at UTi is vice president of predictable performance. “In our early discussions with them, we always knew international would be secondary. Their focus was going to be getting domestic up first. Eventually I think they will get into international.”

Integres attracted controversy when it was announced last year. Domestic forwarders complained that United was infringing on their business. They complained that United and American Airlines had promised to offer capacity to Integres at discounted rates.

Hartigan insisted that Integres wasn’t vying for forwarders’ customers but was seeking shippers that move freight irregularly or in low volumes and don’t have a regular forwarder. Such shippers tend to use FedEx or United Parcel Service for their air shipments simply because they knew the big express carriers, he said. The initial furor has died down, partly because United and American distanced themselves from the new company.

“We now view Integres as just another competitor,” said Brandon Fried, chief operating officer of Adcom Express and chairman of the Airforwarders Association. “There have been so many more dramatic events since that period that any energy wasted on Integres is not going to be beneficial for the industry.”

Integres relies primarily on carriers with overnight services, such as Kitty Hawk, Emery, BAX Global, as well as express truckers — and even United Parcel Service and FedEx.

Hartigan said next-day air comprises “well over 50%” or Integres business. “If there was a surprise, it was in the sheer volume of expedited freight,” he said.

Despite the deviation from its original service model, Hartigan said revenue has been ahead of plan, with the company on target to surpass $1 million in revenue this month for the first time. “It continues to mature very nicely,” he said, adding that expenses have been below plan.

Integres began limited service last October but did its primary launch in January, when Roadway Air began operating. Integres currently employs about 85 people, mostly at its headquarters in Rancho Cordova, Calif. It plans to open a sales office in Chicago and add 15 employees this year. Hartigan said he expects Integres to have a positive cash flow this year.

On June 15, Integres plans to unveil an updated rate-quotation service. Besides indicating, for example, the lowest quote for a shipment’s most likely route if the shipper specifies next-day afternoon delivery, it will offer quotes for next-day morning delivery and second-day morning. The service will use technology from G-Log to immediately route the shipment or hold it for potential consolidation with other freight.

United and American haven’t gotten as much business from Integres as they expected, but they say it has potential.

“Everybody’s got to keep looking for different distribution channels,” said Mark Najarian, vice president of cargo sales and marketing for American. “Integres is a channel that satisfies some of our direct shippers. They want a direct web-based solution. It helps us reduce our costs.”