The Eden Express : Freight: The 3-year-old cargo forwarding firm keeps on trucking despite the Gulf War, recession and the death of its founder. But Eden isn’t just surviving, it’s profitable.
For some young companies, the loss of a founder, especially during a recession, can bring uncertainty and even an adverse change in its financial fortunes.
For Eden Air Freight Inc., an air freight forwarder based in Costa Mesa, it was different. Despite the death of founder Larry L. Rodberg eight days after the Gulf crisis started in August, the 3-year-old company had its first profitable year. That feat was even more impressive considering the sluggish U.S. economy and Gulf War-related problems, such as higher fuel and insurance costs and fewer commercial airline flights, which severely limited available cargo space.
“We struggled along with everybody else during the Gulf crisis and under the current recession,” said Larry P. Rodberg, company president and the founder’s son. “But what we did was to become more creative with our routings.”
Eden’s bread and butter is shuttling large-volume merchandise--such as clothes, computers and electronic equipment--around the country and the globe, and making sure that they are delivered on time. The bulk of its business is with companies in the electronics and garment industry and, to a lesser extent, with manufacturers of automotive parts.
Because the company does not own its own aircraft--like its much larger Irvine-based rival, Burlington Air Express--Eden’s business was threatened when the Gulf War caused a shortage of cargo space.
Eden decided to improvise: Instead of ferrying computers or other goods directly to their destination--its normal practice--Eden created alternate routes.
“What this means,” Rodberg said, “is if we purchased cargo space to Tokyo through Japan Airlines for freight that’s destined ultimately to Australia, my client’s cargo will have to be transferred to several different air carriers in several different cities before they reach their final destination.”
Rodberg likes to call this approach “creative routing.” The result: An average on-time delivery rate of 94% during the Gulf War; its normal on-time delivery rate is 97%, he said. Both rates are higher than the industry average of about 90% during normal times.
Creative routing also means taking a chance with secondary air carriers, such as Air India and Martinair of the Netherlands, which do not fly as frequently to certain client destinations.
According to the New York-based National Customs Brokers and Forwarders Assn. of America, companies with a large international business such as Eden were also aided by a weak dollar.
“With the weak dollar,” said Arthur L. Litman, the trade group’s president, “the volume of exports were growing, and freight forwarders involved in the outbound--or what you call the export market--flourished in the last year, compared to those that did more importing activities.”
One of Eden’s strengths is its senior executives’ strong ties with air cargo providers. Eden was founded by Rodberg’s father, a respected figure in the industry, who helped found Burlington Northern Air Freight Inc. in 1972 and was its chief executive for 12 years. When he started the new company in late 1987, he assembled a team of veteran executives, most of them alumni of Burlington Northern, the predecessor of Burlington Air Express.
In time, these ties played a key role in getting cargo space for Eden’s clients, especially during holidays or wartime, when space can be difficult to get.
From the start, Eden concentrated on clients that ship goods in high volume, Rodberg said, while pricing became a secondary factor in winning contracts. This helped the company become one of the nation’s fastest-growing air freight companies.
It is normal for Eden to bend backward to accommodate and tailor delivery services to individual client requirements, Rodberg said. This flexibility includes purchase order verification, which means Eden employees verify the validity of purchase orders for commodity, quantity and shipment date for clients, he said.
He, like his father, worked hard to establish Eden’s reputation as a reliable deliverer of goods. This is especially important to a young upstart company because dependability could easily build a core of loyal clients in the future.
Eden’s customers today include such big-name companies as Nordstrom, Saks Fifth Avenue, Compaq Computer, Motorola and Sony Corp.’s U.S. subsidiary.
Last year, Eden reported net income of $1.3 million on sales of $36.8 million. A third of its revenue came from international business.
Rodberg said he hopes to boost foreign sales to 50% of total business by 1993, through acquisitions of other air freight companies. This week, Eden made its first acquisition: Miami-based TAT Air Freight Inc., which operates in Latin America and the Caribbean.
Rodberg, who said his company operates in 27 countries, also plans to expand Eden’s routes in the Pacific Rim. The company now serves Singapore, Australia, Hong Kong, New Zealand and Australia and hopes soon to add routes to Malaysia, China and Taiwan.
Eden’s main competitors include Burlington and Tustin-based Right-O-Way, a subsidiary of Canada’s Day & Ross Transportation Group.
Eden Air Starting to Take Off
The Costa Mesa-based freight forwarder recorded its first profitable year in 1990, its third full year in business. The firm has seen its revenues increase tenfold from 1987, and after losing money in nine of 10 quarters, its latest three have been profitable. REVENUE in millions of dollars: 1987 4th Q: $1.1 1988 1st Q: $2.3 2nd Q: $2.9 3rd Q: $4.3 4th Q: $4.7 1989 1st Q: $5.0 2nd Q: $5.9 3rd Q: $6.9 4th Q: $7.4 1990 1st Q: $7.7 2nd Q: $8.2 3rd Q: $9.9 4th Q: $11.0 NET INCOME in thousands of dollars: 1987 4th Q: -$413 1988 1st Q: -$451 2nd Q: -$518 3rd Q: -$276 4th Q: -$357 1989 1st Q: -$334 2nd Q: -$37 3rd Q: $74 4th Q: -$85 1990 1st Q: -$70 2nd Q: $34 3rd Q: $208* 4th Q: $204 * Does not include extraordinary gain of $965,000 WEIGHT in millions of pounds: 1987 4th Q: 2.2 1988 1st Q: 4.6 2nd Q: 5.2 3rd Q: 7.0 4th Q: 7.4 1989 1st Q: 7.5 2nd Q: 8.6 3rd Q: 9.8 4th Q: 10.2 1990 1st Q: 10.9 2nd Q: 11.1 3rd Q: 13.1 4th Q: 14.6
