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Shippers Fight It Out With Network Systems

nsnHow do major international corporations prepare their computer systems for the new economic community that will form in Europe in 1992? A pattern for future developments may be emerging in the parcel-delivery game, and hardware platforms are key elements in the top two players’ game plans.

Top-ranked Federal Express Corp. is armed with number-crunching, fault-tolerant mini-based systems, while No. 2 United Parcel Service of America Inc. (UPS) favors flexible, high-speed PC-based LANs (see PC Week, Dec. 4, Page 1). Both companies use a wide range of hardware, but each has chosen a different platform.

Federal Express, which is building a European system on Tandem Computers Inc. workstations and IBM AS/400 minis, has the modus operandi of giving the customer access to a powerful database. The firm has pioneered the system that it claims lets customers know exactly where a package is located from drop-off until delivery.

UPS, leaning heavily on its growing armada of Token-Ring on Novell LANs, doesn’t market its computerized services, expecting such services to do more for the shipping business behind the scenes than at the customer level.

The European and Asian package-shipping businesses have sputtered along in recent years at an estimated combined revenue of $5 billion annually. But analysts think the business can double with the new interest in fast shipping in Europe and Japan, and they expect computer-aided productivity gains to pick up the slack.

“There’s a revolution in the way goods are being distributed worldwide,” said John Kalmbach, an analyst at stock brockerage Merrill, Lynch & Co. in New York. “Manufacturers in Europe and Japan place a value on low inventories and fast delivery. The market goes to the one who can offer the fastest service and the best price.”

Thomas Murphy, Federal Express’ managing director of international systems development in Knoxville, Tenn., says his firm needs the mini’s fault tolerance because of the amount of customer-targeted data moved with each package. “The record for each airbill is about 2,000 bytes. We can use PCs as front ends, but we need the fault tolerance and high-volume processing you get with Tandems and AS/400s.”

Eventually, Federal Express hopes to set up with European customers and customs offices intricate electronic data interchange (EDI) systems. But it isn’t going to happen overnight, since AS/400s don’t conform to European EDI standards, something IBM officials say they are now working on.

UPS, whose web of local area networks has grown from none to 260 in two years, is focusing its attention on freight handling at overseas transfer points. Since UPS’ West German subsidiary is the largest package-delivery firm in that nation, UPS is working on strategic systems that speed across-the-border package processing.

UPS’ system sends the bill of lading to the receiving country before a package is shipped. Customs officials in that country inspect the bills and pick certain packages for instant delivery. Thus, a package often can be shipped from customs the day it arrives. And for those packages that must await inspection, the time spent in customs can be cut from about four days to two.

Meanwhile, Federal Express has developed its own strategic systems, and customs agencies around the world are beginning to require shippers to use them. Although the advantage held by UPS is thus disappearing, UPS is believed to have other tricks up its sleeve, including extending its computer services to West German customers. Also, by announcing deals with Polish and Soviet governments last month, UPS signaled its intent to build the first overnight shipping systems connecting Eastern and Western Europe.

As for fault-tolerance, UPS had mini-based systems in the past, but dismantled them once the company learned how to maintain control of vast amounts of data on LANs. Nancy Hoing, director of the mini-to-LAN conversion at UPS in Paramus, N.J., said that when she allowed 100 IBM minis to remain active while she replaced them with LANs, UPS didn’t drop a bit, and the minis became nothing more than “expensive protocol converters.”

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