Active Aero Group Broadens its On-Demand Transportation Operations
Belleville, Michigan USA Site Visit
December 12, 2010
By
Evan Armstrong

Key Personnel:
Christopher F. Healy, Chief Executive Officer, Active Aero Group
Greg Davidson, Chief Information Officer and Vice President of Marketing, Active Aero Group
David Camden, Managing Director of Transportation, Active On-Demand

Tony Facciolla, Vice President of Sales, Active On-Demand

Active Aero Group Overview

Headquartered just outside of Detroit, Michigan, Active Aero Group was founded in 1979 as a cargo airline providing small jet cargo lift to automotive industry customers. After obtaining its operating certificate as USA Jet Airlines in 1994, it began operating DC-9 and Dassault Falcon 20 jet cargo freighters.

Today, USA Jet Airlines is a diversified “on-demand” airline operating aircraft in cargo and passenger transportation configurations. Its air charter operation provides air charter management for air cargo shipments and passenger traffic using owned and leased aircraft. USA Jet Airlines has provided air transportation services to many NCAA and professional sports teams, the rock band U2, vacation charters, and passenger shuttles for large corporations. Additionally, it manages crews and maintains aircraft for the U.S. government and corporate customers.

In 2004, Active Aero Group started its non-asset based, expedited transportation management operation–Active On-Demand. Active On-Demand (AOD) is seen by Active Aero’s management as the Group’s long term growth engine. It provides on-demand transportation management solutions for customers with time-sensitive, critical shipments. AOD has over 375 customers including shippers in the Automotive, Defense, and High-Tech industries. It has also been rapidly expanding its services to third-party logistics providers (3PLs) who need a reliable provider for critical shipments.

Active Aero Group has grown to over 300 employees and is on track to generate approximately $175 million in revenues in 2010. Key customers include: CEVA Logistics, Eaton, Ford, GM, General Electric, Honda, Johnson Controls, Navistar, Schneider Logistics, and Toyota. The Group’s two separate operating divisions: Active On-Demand and USA Jet Airlines are detailed in the chart below.

Active Aero Group Companies

Active On-Demand

Active On-Demand’s ability to rapidly acquire optimal transportation capacity for customers with shipments having time-sensitive delivery requirements is a key service differentiator. The approach is multimodal; ground carriers and air carriers compete to handle shipments based upon well-defined customer delivery requirements. This unique business model offers non-asset based solutions with controlled asset capacity available to insure transportation availability during capacity fluctuations. All pricing is spot market; real-time and visible.

Active On-Demand Multimodal Service Offering

AOD relies upon a centralized transportation management center operating model. To support its operations, AOD has developed a proprietary transportation management system dubbed “APT”.

The standard on-demand critical shipment transportation process flow is as follows:

• AOD receives shipment requests from customers via electronic messaging, phone, and other communication methods.
• APT optimizes the transportation mode by sending requests for quotes (RFQs) to a select group of air and ground carriers who can meet the shipment pickup and delivery service requirements. The majority of AOD’s customers specify a core group of carriers for soliciting their RFQs. Customers also allow AOD to match their lowest core carrier’s quote if one of AOD’s in-house carriers has available capacity and can meet the required service levels. Since 1996, AOD has been able to match the lowest core carrier’s quote on approximately 34% of all air shipments and 12% of ground shipments.
• The APT system provides customers with their core carriers’ quotes and AOD’s quote for the shipment.
• The customer selects the carrier for the move.
• Once the carrier is selected, the shipment is then awarded to the carrier and dispatched.
• APT’s comprehensive “ActiveTrack” interface pulls in real-time data from carriers with GPS technology and Federal Aviation Administration (FAA) data feeds. It provides complete shipment visibility to customers and carriers from shipment request all the way through POD (proof of delivery).

The process from shipment request to delivery is shown in the figure below.

Active On-Demand Shipment Milestones

Supporting AOD’s operation is a select group of in-house carriers. It utilizes approximately 87 air charter carriers, 13 air freight forwarders, 40 international freight forwarders, 881 ground expedited motor carriers, and 161 truckload carriers. Many of the carriers are small owner-operators who benefit from AOD’s increasing shipment volumes. AOD’s shipment volumes and transportation spends by mode are detailed in the table below.

Active On-Demand Shipment Volumes and Transportation Spends by Mode

The APT system has significant on-line business intelligence and reporting tools for monitoring transportation service levels and costs. AOD rates the quality of each carrier it utilizes via multiple metrics including: on-time service, communications responsiveness, and retracted quote percents.

Service Crisis Support Case Study – Mexico Floods (July/August 2010)

When Hurricane Alex brought torrential rain to northeastern Mexico in July 2010, many cities including Monterrey and Matamoros experienced severe flooding. The flooding caused significant supply chain disruptions for approximately five weeks. To support its automotive industry manufacturing customers, including Ford, GM, Delphi, and AutoAlliance, AOD managed aircraft charters of inbound materials and outbound products allowing its customers’ plants to continue operating. During the five-week period, AOD managed 436 air charters and spent approximately $800,000 per week to lease aircraft for additional transportation capacity. The leased aircraft included: a DC-8, one 747, two 727’s, two DC-9’s, and a Hercules plane. It also supplied on-site support staff at multiple customer locations and stationed a load master in its Laredo, Texas operation to help coordinate the cross border operations.

Active Aero Group Operations Summary

Active Aero Group has developed into a significant, niche on-demand transportation manager. Traditionally critical unscheduled shipments, while small in number, can add significant unbudgeted transportation costs and consume inordinate amounts of staff time in securing transportation. Therefore, it is not surprising that Active Aero, with its targeted on-demand business model, is gaining traction with shippers and 3PL customers looking for an easy to use solution for optimizing critical shipments and streamlining transportation procurement processes.