Offering greater value, based on greater .
speed:
AIR FREIGHT-
Potentials for Industry
By John C. Emery
Compared to other carriers, air freight is still
a gopher hill on a prairie landscape. Air freight
accounted for just 1/30 of 1% of all the ton-
miles of freight carried in the United States last
year.^ Actually, the weight-lifting capacity of
most cargo airplanes is more appropriately ex-
pressed in pounds than in tons. One railroad
box car accommodates considerably more weight
than the full load of the largest cargo plane yet
produced. The cost of air freight transportation
is high, from. 18 to 20 cents per ton-mile plus
an extra charge for pickup and delivery. Rail-
road and truck rates vary with the commodity
involved and the size of shipment, but it is rea-
sonably accurate to say that air f'reight is just
about five times as expensive as either kind of
surface freight.
One may wonder, then, why a bright future
for air freight has been widely predicted. Is it
possible that so small, so weak, so costly a form
of freight transportation can expect or even hope
to become; a factor of importance to American
business? Can air freight conceivably attain
real stature and significance in the vast trans-
portation network which supports our national
economy? Can it possibly influence the ways in
which industry accomplishes its processes of
production and distribution, increasing their ef-
fectiveness and reducing their cost as the trains
and, in turn, the trucks have done?
' The term "air freight" is used here in its broadest
sense. It includes so called air express as well as air freight
in planeload and less thar planeload lots.
82
An affirmative answer seems appropriate. Air
freight is small and weak now, but it is gaining
steadily in scope and capacity. Air freight is
costly now, and perhaps it always will be, but
cost is a relative thing. Value is what counts;
and air freight has a unique quality, its tremen-
dous speed, which may be able to convert high
cost into still higher value to industry. The in-
dustrial leadership of the United States rests, in
part at least, on the firm business policy of giving
more significance to value than to cost. Amer-
ican business has consistently demonstrated its
willingness to adapt itself, if necessary by major
internal adjustments, so that the last ounce of
value will be wrung from a new service of poten-
tial benefit. Any transportation service, so used
by business, has a future of assured magnitude
and importance.
Economics of Transportation
Air freight should not be viewed in the light
of its dramatic qualities; these are temporary
rather than long run in effect. Rather it should
be thought of simply as a new form of transpor-
tation, the latest in a long succession of changes
and improvements, some basic and some evolu-
tionary, which have characterized the history of
freight carrying. Each of these changes has
looked pretty dubious at the start; yet in the
course of time each has profoundly influenced
the scope, the methods, and the geography of
business. Why is an industry in a certain loca-
tion? From what sources does it draw tbe mate-
rials for its production? What defines its mar-

ket area and the location of the facilities through
which tbat area is supplied? In the answers to
these questions runs one common thread, and
it is transportation in all its varied and progres-
sively changing forms.
Advantage of Speed
Industry has granted an extraordinary accept-
ance to each new increase in the speed of freight
carrying. This is significant in considering the
business implications of air freight since, with its
advent, the speed of transportation available to
shippers has had unprecedented acceleration.
Transit Days. In freight transportation, speed
is measured in terms of transit "days" from one
place to another. Business, in both production
and distribution, is adjusted and arranged today
to take the best advantage of the speeds in terms
of transit days of rail, highway, and water trans-
portation. In the procurement of the materials
and parts which feed their assembly lines, pur-
chasing agents and production managers prefer
to rely upon sources only a day or so away by
rail or truck, partly because the freight cost is
less but also because the dependability of on-
time deliveries is improved. Sales and service
managers are uncomfortable if any customer is
more than a day from the supply which they
offer. That is why branch ser\'ice departments
are scattt;red across the map by companies sell-
ing nationally, each the center of an area having
a radius generally equal to the range of over-
night (or "first day") surface transportation.
The urge to be no more than one day by
freight service from every supplier and customer
appears to be strong in all lines of business. The
structural pattern for production and distribu-
tion observed in the layout of facilities of both
major and minor companies suggests that the
transit speed and overnight range of available
transportation have been controlling influences.
Overnight in terms of surface freight carriage
is no more than 400 miles.
Overnight Delivery. Overnight in terms of
air freight, however, is a vastly greater distance.
By air freight, tbe eastern and western limits of
the United States are overnight from each other.
A freight plane leaving New York at midnight
will be in Los Angeles early the next morning.
By air freight, compared to surface freight, it
is no farther now from Boston to San Francisco
than it has been from Boston to Buffalo. It re-
quired over a hundred years to produce eight-
Air Freight 83
day surface freight service from coast to coast.
Now, in its brief history, air freight has bettered
that performance standard by nearly 9 0 % .
This simple premise, that air freight offers
a new speed standard and that business puts a
controlling high value on freight speed, is the
basis for predicting a large growth and useful-
ness for air freight. This is not to say that in
freight movement the plane will supplant the
train and truck. The degree of replacement
may never be of broad dimensions. Nor is it
to say that in a week or a month or even ten
years we are likely to witness a wholesale adop-
tion of air freight as a general, routine carrier
by industry. Too many internal adjustments
must be made first by business if the value of
a steady, planned use of air freight is to exceed
its cost. These adjustments will require time,
much time and that is fortunate, because air
freight itself still is far from ready to be adopted
broadly by business.
Retarding Factors
In appraising the present unreadiness of air
freight to assume any substantial part of the in-
dustrial traffic burden, it must be remembered
that air transportation as a whole is very young
as an industry, and air freight is the newest seg-
ment of that new industry.
Although there was such a thing as air freight
prior to and during the early 1940's, this form
of commercial transportation may be said to
have been conceived in World War II and born
after the cessation of hostilities in that global
conffict. It was in 1946 that air freight lines
began their operations and that air freight tar-
iffs and services were first offered widely by
passenger airlines. Accordingly, air freight is
considered to bave made its start as recently as
1946, which would make it now seven years old.
Seven years is not long. It takes almost that
much time to design and build an airplane.
Account must also be taken of a variety of
circumstances, some political, some economic,
and some directly related to national defense.
In combination, these considerations have kept
air freight from growing at as rapid a rate as one
would expect from a business with such in-
herently dynamic potentialities.
Internal Conflicts
Air freight made progress during its first
three years but not the sort of progress that
84 Harvard Business Review
would have been made if the time, expense, and
energy devoted to hearings, argument, and liti-
gation had been concentrated on air freight sales
and operating performance. There was destruc-
tive competition between air carriers of differ-
ent types, and between 1946 and 1948 the
leaders in the air freight business were contin-
uously occupied with their lawyers in almost
endless proceedings before the Civil Aeronau-
tics Board.
Many veterans with air freight transporta-
tion experience in World War II were deter-
mined to put their military experience to com-
mercial use through the formation and operation
either of a cargo airline or of air freight for-
warding companies. In order to operate as
common carriers, they required recognition by
and authorization from the Civil Aeronautics
Board which regulates air transportation for the
federal government. Their applications for oper-
ating rights were resisted with great vigor and
determination by the so-called passenger air-
lines which held air carrier rights covering the
entire nation and naturally preferred not to
share them with the newcomers. The hearings
before the CAB and before the courts dragged
along for many months and were costly not only
in money but in time which might have been
put to constructive use.
By the latter part of 1948, the cargo airlines
and forwarders had temporary operating rights,
and an armistice had brought an end to the
most damaging intercarrier warfare. It would
have been a favorable time for all hands to
buckle down to a concerted effort toward the
promotion of the business. Unhappily, there
were other interruptions.
A lingering animosity bet^veen the passenger
and cargo carriers, plus the necessity for rapid
generation of freight to fill the planes, produced
a mild form of rate war. This depressed the
freight earnings of both passenger and cargo
airlines and generated skepticism as to the ac-
tual profitability of freight among their man-
agements. The passenger airlines also had their
hands full with a booming passenger volume
and a new competitive attack from the operators
of so-called nonscheduled air coach services.
The cargo airlines in turn unable to make
ends meet on a straight diet of freight at de-
pressed rates and lacking the advantage of sup-
plementary income from high-revenue passen-
ger, mail, and express traffic found it neces-
sary to look for special sources of earnings. They
found these sources in chartered operations for
passengers and the government, and these dis-
tractions, while perhaps essential to the immedi-
ate solvency of the cargo lines, still disrupted
critically the daily, dependable, scheduled op-
erations for the general shipping public that
represent the only foundation on which a sub-
stantial air freight business can be erected.
Insufficient Capacity
They undoubtedly regretted the occasion, but
it is not at all unlikely that the airlines of all
types, with an eye to their earnings, felt a sense
of relief when the Air Force, to establish a fast
supply line to Japan and Korea in 1950, requi-
sitioned over two-thirds of all the cargo planes
operated in domestic freight service and put
them to work on the transpacific airlift. The
airlines were to operate the planes and the
contracts were lucrative, much more so than
commercial freight operations with the same
equipment, so the carriers themselves were tem-
porarily benefited.
The removal of so large a proportion of the
domestic airlift, however, was a staggering blow.
It pointed the development of the air freight
business along lines other than those which
would contribute most to its maximum useful-
ness and broad acceptance. Air freight service
for other than fairly small packages has been
simply unavailable in many parts of the coun-
try. With adequate capacity lacking, the bulk
of the commercial airlift has been concentrated
in a relatively few narrow service channels.
Furthermore, the concentration of available
freight-carrying capacity along key air routes
has not supplied enough daily capacity to per-
mit a consistently dependable service even be-
tween a few cities. As a result, the one con-
trolling advantage of air freight, its speed, has
been lost to many shippers by inability of the
carriers to get all of the freight moved as it has
come in. Freight sitting at an airport and wait-
ing for a plane which may accommodate it some
time tomorrow breaks no speed records and dis-
courages shipper confidence.
Delays from inefficient ground handling are
much less serious. An average freight shipment
will be picked up at 4 p.m. in New York and de-
livered in, say, Cleveland at 8 a.m. the next
day, which is probably the earliest the con-
signee opens his doors. The over-all transit
time is 16 hours. The air time is 2.V2 hours.
Statistically, all but a small percentage of the

transit time is spent on the ground, but that is
of no consequence because the normal shipper
would not benefit from quicker service than over-
night. It is a fact that the ground-handling
facilities of the airlines are much poorer than
they should be, but they produce more in the way
of high cost to the air carrier than they do in
significant delay to air shipments. The really
serious trouble is when the shipment fails to
leave the ground because of insufficient airlift.
Essential Needs
Airport-to-airport speed tells only part of tbe
story. A useful air freight service must be com-
prehensive in its availability; must have capacity
to accommodate peak offerings of tonnage; must
provide its speed not in occasional bursts but
day after day, dependably. Air freight service
during its first seven years bas been too largely
lacking in these essential qualities. Tbat is why
shipper acceptance of air freight as a transporta-
tion service for routine, regular use has yet to
solidify. That is why air freight traffic has de-
veloped with relative slowness.
Yet valuable services to sbippers bave been
rendered; gains in volume bave been made. In
1946 air cargo ton-miles (both air express and
air freight) were 82,600,000. Five years later,
in 1951, the Civil Aeronautics Board calculated
the air cargo ton-mile figure at 245,500,000, a
gain of [97%. In 1952 preliminary reports of
all types of cargo carriers indicate that a new
record of ahout 275,000,000 ton-miles was set.
This is not a bad rate of grow th, considering
the obstacles, but neitber is it a good one. Ac'^
tually, business conditions bave been highly
favorable for a mucb faster rate of progress. The
fact is that neither in its operation nor in its
promotion has air freight aimed at the creation
of a traffic of its ownn, as distinct from the traffic
it could take away from other carriers.
Sources of Business
Each new form of transportation develops in
two stages. The first is the "take-away" stage.
A certain block or type of traffic exists. It is
carried by an older form of transportation which
may have become complacent about it. The
new kind of carrier sees this, provides competi-
tive rates and an equal or better service, and
endeavors often successfully to win this
already existent business for itself. That is how
Air Freight 85
truck transportation started, competing for mer-
chandise traffic originated by the older railroads.
The second kind of development through whicb
each new form of transportation goes is the
"creation" stage. Here tbe special attributes of
the new- carrier become tbe core around which
new^ traffic is generated. Truck transportation,
now thirty or so years old, is well advanced in
this second stage.
Present Traffic
"Take-Away." So far, air freight has been
successful mainly in taking away from express
transportation, especially in respect to heavier
sbipments. To tbe extent tbat air freight serv-
ice is available to sbippers, some of its prices are
as low as rail express rates and actually lower
between some of the most important shipping
and receiving centers. Air freight performance,
even with ground delays and inadequate lift
capacity, is still generally faster than rail express
over any but the shortest distances. With com-
petitive rates and competitive service, it has not
been difficult for air freight to make inroads in
the business of rail express, and an ofF-hand
estimate, wholly unconfirmable, is that at least
three-fourths of today's air freight tonnage and
revenue come from this source.
"Created." The remaining one-fourth, or
whatever the exact proportion is, bas been traffic
created by the speed, actual or occasionally pos-
sible, of air freight.
Throughout the seven years of air freight's
existence, business in tbe United States has
been conducted at record levels of production.
The pressure for maximum output in most busi-
nesses has been heaw and continuous. Produc-
tion lines have strained to keep pace; and since
some materials have been in short supply,
the backlogs of parts and subassemblies bave
dwindled away. Leaders in manufacturing tech-
niques, like Ford and Ceneral Motors, ha've be-
come accustomed as normal practice to assemble
today from supplies of parts whicb arrived only
yesterday or last night. To maintain the flow of
production materials in this way, as a substi-
tute for stockpiling, is a toucb-and-go proposi-
tion, especially when the assembly plants are
scattered from coast to coast and accordingly
far from suppliers. In quickly making up day-
to-day shortages which may frequently occur
when production is carried on in such tight fash-
ion, the speed of air freight has been invaluable.
86 Harvard Business Revie^v
Perhaps it is emergency traffic on which no car-
rier can afford wholly to rely for its livelihood,
but it is traffic which air freight speed has in
fact created itself.
Similarly, in distribution, active markets and
occasional or persistent shortages have exerted
pressure on sales and service departments. Even
a narrowly available, thin air freight service is
bound to benefit and to be of benefit in these
circumstances. Again in what might be called
"emergency" conditions, air freight's speed has
tended to create the beginnings of its market
among those who sell their products widely.
Future Traffic
In its "take-away" character, air freight has
further room in which to grow. It would be
unsound to dismiss this phase as of no conse-
quence. It is in its "created" phase, however,
that the important future must lie, if air freight
is to have an important future. That is the
lesson taught by every chapter in the history
of transportation. The question is whether
the modest amount of traffic creation already
accomplished by air freight gives a real clue
to the future.
In other words, do emergency shipments
moved by air suggest the possibility of advan-
tageous normal use of the speed and range of
air freight to which the shippers resorted be-
cause they were hard pressed? Of course, while
cost, no matter how high, is a secondary consid-
eration in emergency, it is a primary consider-
ation in ordinary business circumstances. If
air freight cost is at a premium level, as it is and
probably always will be, it can be made a bar-
gain, or given controlling value, only if its char-
acteristics permit otber savings still larger in
amount. There is reason to believe that these
possibilities for higher value in the face of high
rates do exist and are worth exploiting.
Implications for Industry
The suggestion that air freight speed has a
high-value potential to business stems essentially
from a conception that some part of the facilities
and payrolls of industry result directly from a
lack of speed in available transportation. To be
more specific, consider in basic terms two com-
mon procedures in production and distribution
of the sort of items, w-hether they be toasters or
tweed suits or automobiles, w'hich constitute so
large a part of our national product.
Reducing Storage Costs
The heart of manufacturing is the assembly
line, in one form or another. Materials, parts,
and subassemblies are brought together at one
end or along tbe sides of tbis line. The finished,
assembled product emerges at the other end.
Economy stands or falls at the assembly line,
and it results from uninterrupted flow. To
maintain that flow- without interruption, there
is or has been commonly a backlog of materials,
parts, and subassemblies at the starting end of
the line. These components have come there by
transportation, usually in large quantities
carload and truckload lots.
But tbis backlog belongs to the manufacturer
while it is sitting there, and that costs money.
It must be stored, and that costs money. It must
be handled into storage and out of storage by
labor and machines, and that costs money. A
bad guess on the market may bring obsolescence
to the components in the production stockpile,
and that costs money. So the smaller tbe stock-
pile that the manufacturer needs to maintain,
the greater the economy.
How it all works out on balance whether
sucb a saving in stockpile costs will be offset by
greater costs in procurement is a question
whicb each manufacturer must answer for him-
self. But manufacturing from virtually non-
existent stockpiles is not uncommon today. As
noted, at least two major automobile companies
have adopted the concept of extending the "flow"
principle of their assembly lines back to their
suppliers and beyond, and it seems in fact to be
working.
Of course, air freight is not tbe principle
transportation factor in this kind of production-
control process; carload and truckload services
fill the basic requirements at low cost. But air
freight is the key to its success. Special policing
of movement is needed because shipping, transit,
and receiving schedules must be precisely main-
tained. Whenever the normal flow is inter-
rupted by a work stoppage or lag at the sup-
plier's plant or just by some minor mishap on tbe
rails or highway, as so often happens tbere
must be a way immediately to make up hours or
days of delay and sustain the continued opera-
tion of the assembly line. Here is wbere air
freight comes into the picture.
If the extension of the assembly line "flow"
back to original material sources is a sound
principle, controlled transportation is the key.

And air freight, with a speed far surpassing that
of any other carrier, is the adjustment factor.
Customer Service
In distribution, again in basic terms, air freight
seems capable of playing a more important role.
It has been suggested already that sellers like
to be near their customers, and that this is ac-
complished by large national concerns through
strategic;ally located parts depots and ware-
houses. With this pattern of service facilities
the Oregon owner of a tractor manufactured in
Illinois does not have to wait for a needed spare
part until it can be sent by surface freight from
the Middle West. He orders it from his local
dealer, who draws it overnight if all goes
well from the manufacturer's branch ware-
house in Portland. That is customer service
based on the narrow, one-day range of surface
transportation. It is economical, too, in a sense,
because the warehouse is supplied by carload or
truckload freight, at lowest transportation cost,
and the final haul to the customer is short.
But here again there are other costs resulting
from seirvice through branch warehouses. The
warehouse building is costly to build and main-
tain. Employees to receive, handle, store, and
issue are costly. Obsolescence and deteriora-
tion can be costly, especially in these days of
rapid p::oduct change. Even warehouses run
short of some items, requiring recourse to more
distant supply for a single part, and this is costly
in transportation charges as well as represent-
ing potential delay in serving the customer.
With air freight, ideally, there is much less
of the customer-service requirement for costh-
branch supply depots. Air freight is so fast that
practically every customer is overnight from the
manufacturer whose product he employs. One
customej: of a New Jersey manufacturer, located
in Richmond, California, has repeatedly re-
ceived air shipments from the home plant earlier
the morning after placing his order than he has
received simultaneously ordered parts from the
San Francisco branch warehouse of the com-
pany. It is perhaps 15 miles from San Francisco
to Richmond, compared to 3,000 miles from
New Jersey. Yet such is the speed of a good air
freight service that in transit time the distance
is the same.
It would be nonsense to suggest that all branch
service facilities of national concerns should
be eliminated. In certain heavy-consumption,
stock-item lines, they have their place as afford-
Air Ereight 87
ing the best customer service at lower cost. But
it seems clear that, with air freight speed avail-
able, there may be less need for having so many
warehouses and for stocking those that do re-
main with parts which are in less common de-
mand. Air freight is expensive, but it may have
greater value in eliminating still larger ware-
house, labor, and inventory cost factors.
Case Studies
So far, these suggestions for the application
of air freight to standard business situations have
been for the most part quite general. It is pos-
sible, and it may assist toward clearer compre-
hension, to cite specific examples of the applica-
tion of air freight to actual problems of American
business organizations:
(1) A manufacturing company with branch fac-
tories in 36 cities had carried inventories of spare
parts for internal maintenance at each branch. The
continuing value of the inventory was a constant
burden on the company's cash position. As a cor-
rective measure, the spare parts inventory was con-
centrated in 3 distribution centers so situated that
in most instances spare parts required for immediate
use by any of the 36 branches could be forwarded
to them overnight by low-cost surface transporta-
tion but with air transportation to provide maxi-
mum speed as necessary over long distances. In-
creased transportation was offset by savings in the
avoidance of duplicate handling and storage, and
the amount of cash tied up in spare parts was re-
duced by half from $12 million to $6 million.
This represents a shrewd integration of different
kinds of transportation, which is the key to getting
the best over-all results at the lowest net cost.
(2) A printer in Pittsburgh had developed an
excellent volume of local work. To broaden his
sales still further, he solicited new business in
other cities, some of them hundreds of miles away.
His sales story: quality printing and on-time de-
liveries, based on the fact that "I am as close to
you by air freight as any printer in your ovVn city."
In a parallel instance, financial printers on the
West Coast now compete actively and successfully
for business in the East, air freight overnight de-
liveries being the equalizing factor. And of"course
Eastern financial printers retaliate in kind.
(3) Here is a more specific picture of one of the
large automobile companies, with assembly points
from coast to coast, that matches the continuous
movement of the assembly lines with the continu-
ous flow of materials from suppliers. This manu-
facturer operates under a production control plan
which involves stockpiles of some components lim-
ited to only 30 hours' usage at the standard pro-
88 Harvard Business Review
duction rate. And the cost of the premium trans-
portation that is, the air freight which makes
the plan work smoothly comes to only 2% oi
the company's total monthly transportation bill of
$10 million.
(4) Feature films from Hollywood ordinarily
are produced and sold long before their dates for
puhlic showing. Some of them must wait in film
vaults for weeks and even months before they can
begin to produce a box-office return on the heavy
investment in them. Occasionally, however, pro-
duction will be so delayed that completion comes
on the eve of the release date. Then, from Holly-
wood by air freight go all the prints directly to the
first-run houses, bypassing transportation to and
from storage and eliminating the waiting period
for a return on the investment. Ordinarily, this
represents an emergency use of air freight; yet the
implication is here that a value as great as the
extra transportation cost might be enjoyed by a
producing company making routine use of direct
air shipping.
(5) Airplane companies, heavily involved in
military aircraft production, are naturally not
averse to using the new kind of transportation
which represents their commercial market, and they
lean strongly on air freight to feed their production
lines. All of them must draw from all possihle
suppliers, no matter how widely scattered. The
task of coordinating arrivals of different kinds of
components from so many places would be a stag-
gering one if it were not for the fact that air freight
speed is such an effective destroyer of distance. As
in the case of the automobile manufacturer, the
bulk of their materials still comes by train and
truck, but air freight is the balance wheel which
keeps everything on schedule,
(6) Several drug companies are major air freight
users. In this field where new and competitive
products develop with such rapid frequency, there
is no time to fill a complicated supply line between
producers and consumers. Air freight distribution
is developing into a standard procedure, at some
premium in transportation cost but with a substan-
tial improvement in the expense and difficulty of
matching demand to supply through traditional
channels,
(7) Several kinds of food products and other
perishables are finding virgin markets now through
air distrihution, Maine lobsters and Boston carna-
tions are sold to new customers in Texas and the
West, California flowers move eastward by the
ton, making up half the eastbound air freight lift
from San Francisco, Alaska crab, Kansas City
steaks, and many other such specialty food items
are seeking and finding new markets through air
freight, A transportation service which can span
the continent overnight can make a "local" market
for anv product anywhere.
(8) Department stores are becoming daily, rou-
tine users of air freight service for certain items.
The garment centers of New York, Chicago, and
Los /Angeles are major sources of air freight ton-
nage even now. The reasons, of course, stem from
high inventory value, the perishability of fashions,
and the need to coordinate purchases more pre-
cisely with sales. In some instances orders taken
on a showing of samples are filled for the customer
directly by air from the suppliers, with delivery
prompt and a general saving in eliminating re-
peated rehandling. Air freight has made its mark
in the department store field, but it may well be
only a beginning.
Conclusion
These examples, taken at random from the
observations and experiences of the air carriers,
do not prove that a broad market exists for air
freight. They do strongly suggest it. They sug-
gest a wide variety of circumstances in which
premium air freight cost can produce a positive
value. For some businesses, it may bring a sav-
ing in manufacturing cost; for others, a saving
or improvement in customer service; for still
others, broader markets for expanded sales.
The certainty of the value of air freight may
still be lacking, but the possibility of that value
is clearly present.
Preparing for the Future
One thing is certain. There will have to be
internal adjustments within industry if a sub-
stantial value is to be derived from a routine,
"standard practice" use of air freight. These
adjustments will affect facilities, personnel, and
procedures; and they will take time. This is
fortunate, as has been stated before, because
air freight also requires major time-consuming
adjustments before it will be ready for large-
scale industrial use. It may take years to prepare
industry for air freight. It will take years to
prepare air freight for industry, along the follow-
ing lines.
Increased Capacity. Air freight capacity must
be greatly increased. Roughly half the freight
lift today is provided by passenger planes. These
serve directly some five hundred cities, but their
capacity is limited as to the freight weight and
package size which they can accommodate, A
few of the newest passenger planes have cargo
capacity of as much as four tons, but tbe portion
available for freight is reduced by passenger.

baggage, and mail loadings. Most of the passen-
ger equipment of the sort which serves medium-
size cities like Dayton, Ohio; Madison, Wis-
consin; and Des Moines, Iowa have limited
cargo accommodations at best, and these must
be shared again with baggage, mail, and express.
In service within the United States today are
only a few more tban a hundred straight cargo
planes, and they have a combined lift of well un-
der a thousand tons, the equivalent of about fifty
box cars or tractor-trailer combinations. With
their speed and with close scheduling to pro-
duce maximum utilization, these cargo planes
can generate ton-miles of carriage at a more re-
spectable rate than their numbers imply, but
they are still no more than a few drops in the
bucket compared to industry's needs. Many
times the number of today's freight planes will
be required to equip air transportation for a sig-
nificant role in the freight transportation system
of the future.
Broad Expansion. The scope or national cov-
erage of air freight requires broad expansion.
Industry produces and distributes on a compre-
hensive, nationwide scale. It is not concen-
trated along one channel between New York,
Chicago, and California where so much of the
air freight capacity is now directed. The pas-
senger planes serve other areas, but their capac-
ity for freight and accordingly their usefulness
to freight shippers is sharply limited. The many
more cargo planes which are needed must be
operated over a network of routes connectina
all the pri:ncipal centers of production and dis
tribution. Of the hundred or so largest United
States cities, only a modest fraction are served
consistently-, day after day, by cargo planes ca-
pable of carrying an appreciable freight tonnage
Industry cannot extract value from such piece-
meal coverage. The only useful air freight serv-
ice is a national service.
Coordination with Surface Carriers. There
is a sharp need also for something that is now
too rare: smoothly working coordination of air
and surface freight services. Consider what a
substantial part of the business of the countrv
IS done in its smaller cities and towns. For ex
ample. look at New England, a supplier of
manufactured articles on a huge scale to all the
48 states, an area with few large cities but
scores of important manufacturing towns. In
all New^ England, only Boston, Hartford and
Air Freight 89
Springfield have even a moderate amount of im-
mediately available air freight lift.
The hundreds of small off-airline manufac-
turing towns, which dot the map of the coun-
try and which contribute so impressively to our
national production, add up to an especially im-
portant market for air freight. They have not
been well served by surface transport:ation. Air
freight can take care of them, but first there
must be workable, dependable truck connec-
tions with the airlines. This off-airline market
is at once the most promising and most chal-
lenging which confronts the air carriers.
Better Performance. Along with more planes,
broader coverage, and coordination, air freight
to be useful must provide a better average of
performance. A shipper who needs speed" will
buy it, at a premium in cost. If he does not get
speed, dependable speed, he has thrown his
money away. The inadequacy of today's airlift
is the major reason why speed bought fails often
to be delivered.
Adverse w^eather, contrary to popular opinion,
is of no real consequence so far as dependability
of freight movement is concerned. Today's
large, long-range, high-flying aircraft and the
new electronic pilot aids have taken care of that.
It may not seem that way to airline passengers
who vividly remember their latest brush with
the weather, but airline operations are remark-
ably regular. One of the largest lines last year
operated 97.7% of all its thousands of scheduled
flights. With some types of its equipment, per-
formance was only a hair's breadth short of
100%. Weather delays of brief duration one
or two hours, perhaps can and do occur, when
airport visibility is zero or close to it, but these
mean little or nothing to freight deliveries.
Increased capacity will help take care of de-
pendability. Along with it, however, must come
better facilities, better trained personnel and
also better methods for the movement of air
freight with precision and accuracy. Then in-
dustry can, if it should wish to do so, arrange
and adjust itself for consistent reliance upon the
speed of air freight service.
Premiutn Rates. Contrary to a highly popu-
lar view, reduced air freight rates are not an
important prerequisite to the broad development
of air freight utilization by industry. Perhaps
they would accelerate the development, but not
significantly. Air freight rates, airport to airport
90 Harvard Busiftess
now average a little less than 20 cents per ton-
mile. If reduced 10% or 2 0 % , they would
still be far higher than rail and truck rates. Even
if reduced 50%, they would still be at a pre-
mium level in comparison with all surface
transportation except railway express.
Air freight rates may be reduced some day,
but it is a realistic estimate that they will remain
relatively high for all time. It is upon value,
based in turn upon speed, that air freight must
rely as the foundation of its future. Better to
provide speed with capacity and scope and de-
pendability, at a high price, than to reduce rates
at the expense of these most important attributes.
Potentials for the Future
Will air freight become a factor of importance
to American business? The answer will be writ-
ten over the next 10 to 20 years, not sooner.
The forecasters of the Department of Commerce
take a rather conservative view; they predict 600
million to 800 million air freight ton-miles by
i960, which would be 2.8 times the 1951 vol-
ume.- Others look for twice this much growth.
These are only guesses. The air freight ton-
nage of i960 or of any other future year will be
determined by the degree to which industry,
eager for speed, is willing to buy it for its value,
and by the rapidity and zeal with which the air
carriers are willing and able to expand their
capacity for speed with dependability. Bear this
in mind: if air freight accommodates only i %
of the nation's traffic burden, it will be not two
or three times but thirty times as large and useful
as it is today.
^ U. S. Civil Aeronautics Administration, Staff Study,
Domestic Air Cargo Forecast, 1955 & i960 (Washington,
Department of Commerce, 1952). P- 67-

MANUFACTURING, it is rapidly coming to be true that to stay alive and

Iprosper a manufacturing concern must be prepared to meet compebtion
coming to its prospective customers from any place within the one big market

Noilnoi Iif b t market can be ignored, and new technical developments

frequentlv have this^erv thing in mind - to enable a producer economically
to reach further and further into the national market.
Take such a traditionally localized product as milk. When I lived in
Valparaiso Indiana, as a bov, milk deliveries were not even town-wide, but a
mat'e of V e capacity of your neighbor's cow. Milk now has become region^
ahzed, by rapid transport; a new development to can fresh milk may put it

ttt1
A s T t n t i t 1 o f comvemon for the one big market, localized manu-
facturing with a localized market is more and more becoming an exception,
andTe'conomic difficulties within its own market, as against national com^
petition "row all the time. Small localized manufacture's function is coming
to be tha^of a supplier to some national business, a Big Business, or the pr^

ver^smaU manufacturers of single components of ^ e , - g e r ^ p

products. This in part accounts for the remarkable vitality of small
^ ^ ^ ^ S ^ t ^ ^ ^ s Bigness. What makes for size, then, is
the big market. We need Big Business for a big country.
naviH F Lilienthal, Big Business: A Neiv Era
David h. Liuemnai, ^^^^ ^^^^^ ^^^^^^ ^ Brothers, 1953. PP- 88-90.
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