1. Small Package Shipping State of the Industry Presented By: Mike Erickson, President/CEO AIMED Fall Conference - St. Louis Friday, October 22nd 3:00 - 4:00pm

2. We Are Comparing The Four Integrated Carriers DHL Formerly Airborne FedEx UPS USPS

3. Today’s Competitive Marketplace Carriers are battling it out for market share and competition is greater than ever before Why is this happening now?

4. Recent Industry Trend: Carriers Now Offer a Full Portfolio of Services A number of factors have converged to create the most competitive small parcel marketplace ever In prior years, each carrier had a unique market niche, and were content to concentrate on that area: there was little or no market overlap UPS, FedEx, DHL, and the Postal Service now offer a full suite of air, ground, and international shipping options

5. Late 1990’s: Each Carrier Had A Market Niche UPS was the ground carrier of choice FedEx was the air carrier of choice DHL was the strongest international carrier USPS concentrated on mail and residential small parcel shipments Airborne-low cost express RPS-commercial ground shipments to metro areas

6. Factors Contributing To Increased Competition Economy Package volume growth has been flat Not as many new packages are being shipped Carriers must get their additional volume from other carriers Available Capacity New regional hubs, larger truck networks and enhanced technology allow carriers to handle more volume

7. Factors Contributing To Increased Competition Technology Sorting Facilities Bar-coding Tracking Shipping Automation Interactive Websites EDI Billing Advances Data Capture Technology

8. UPS Technology UPS CampusShip UPS WorldShip UPS OnLine Compatible Solutions ConnectShip UPS Toolkit UPS Address Validation The Quantum View Billing Format Options Flat File Bill EDI-generated bill Paper bill

9. FedEx Technology FedEx Café FedEx Ship Manager FedEx.com - online shipping FedEx Insight Adhoc Reporting Billing Options EDI Datalink Download invoices from Fedex.com

10. Factors Contributing To Increased Competition New Services Faster Ground networks Residential offerings Special freight services UPS store FedEx Kinkos Portfolio Pricing – The single biggest factor! Carriers offer the maximum discounts only if you give them most, if not all of your business

11. New Ground Competition UPS and FedEx have enhanced ground delivery times; ground shipments are now day-definite and guaranteed FedEx Home Delivery now serves the entire US The merger of Airborne & DHL creates a new, strong competitor USPS Parcel Select: new service enhancements, new partners

12. New Air Competition On-time performance is at an all time high for all carriers Carriers have switched most customers from flat- rate (unzoned) pricing, to zone-based pricing Carriers are now targeting specific segments of the air market (letters, heavier and larger shipments, industry groups, etc.)

13. New International Competition While domestic growth is flat, international growth is in double digits FedEx and UPS have added new overseas infrastructure, new hubs Airborne, formerly weak in the international segment, has now become a key player thanks to the deal with DHL

14. Knowledge is Power Carrier Reports Equal Knowledge and Opportunity!

15. Common Add On Charges: Address corrections Residential delivery Oversize charges (ground) Dimensional charges (air) Saturday delivery Declared value (insurance)

16. New Add On Charges: Fuel surcharges Delivery area surcharge on air shipments Excess tracking fee Package return charges Security surcharges At last count, there are more than 80!

17. UPS - 9.5% FedEx - 9.5% DHL - 9.8% *These new rates were effective October 4th, 2004 Ground -- All carriers dropped fuel surcharge USPS -- No surcharge They’re no longer “temporary” Fuel Surcharges - Are At An All Time High!

18. Residential Surcharges FedEx air & ground $1.75 FedEx Home Delivery $1.40 DHL $1.75 UPS $1.40

19. Rural Surcharges Carriers call them “delivery area surcharges” $1.00 Commercial $1.75 Residential $15.00 Alaska You can obtain DAS files from carrier websites AFMS can email you a DAS file we co-developed with Postal World Magazine - has all carriers and includes zip, city and state

20. Ground Delivery - Delays UPS, FedEx Ground & Express, DHL: Monday Through Friday FedEx Home Delivery: Tuesday Through SaturdayUSPS: Monday Through Saturday

21. FedEx and UPS – Dramatically Improved Ground Transit Time DHL – Adding New Ground Hubs (to be completed in 2005) Ground Transit Times

22. UPS, FedEx And DHL Have Essentially The Same Base Ground Rates USPS-Has It’s Own Pricing Ground Pricing

23. Air Pricing: Flat Rates VS Zoned Rates Carriers Are Moving From Flat To Zoned Rates Big Change In Priority Mail Last June - Only 1lb is Now Flat Rate Are You Better Off With Flat Or Zoned Rates?

24. What They Say All All Air And Ground Commercial Packages Are Guaranteed To Be Delivered On- Time... Or You Get Your Money Back!

25. What They Actually Do Many New “EXCEPTION CODES” Some New Contracts Prohibit Refunds New Penalty Charges Shorter Audit Times

26. QUESTIONS? THANK YOU! mike.erickson@afms.com1-800-246-3521www.afms.com