hen Kitty Hawk Aircargo announced in late 2005 that it was starting a scheduled trucking network, the freight airline was throwing its business future behind one of the air cargo industry's surest trends of the past two decades. The airline essentially was saying if you can't beat trucks, you might as well drive them.

But Kitty Hawk's move to trucking also set new border lines in the competition for expedited shipper customers, laying out new boundaries between air freight trucking services and the traditional truck operators that have fine-tuned services, expanded their reach and increasingly blurred the lines between the air and the road. For shippers and air forwarders - and perhaps most important the airlines - the new question in domestic expedited services will be how far truckers are willing to go to claim more of that air cargo business.

Anxious for the premium prices of air freight, a long lineup of less-than-truckload carriers is expanding next-day service lanes and revamping route networks to get more overnight and second-day industrial shipping business.

"Our business under 800 miles is growing faster than our business over 800 miles and we expect that to continue," Bob Davidson, president and chief executive officer of Arkansas Best, parent of Arkansas-based LTL carrier ABF Freight System, said late last year.

ABF, the long-haul and regional operations under YRC Worldwide, and regional specialists such as Con-way and Estes Express Lines are among several less-than-truckload carriers that have expanded their next-day and two-day services, presenting air freight forwarders with new competition even as they provide important new capacity in an increasingly cost-conscious domestic shipping market.

"There's a symbiotic relationship" between LTL and air freight trucking, says Sean O'Neil, director of sales for time-critical services at Averitt Express, a Tennessee-based regional less-than-truckload carrier.

"On the one hand, forwarders and truckers compete, but more and more air cargo companies are using the LTL carriers as an asset-based resource."

There seem to be plenty of shipments on the margins, ready to move either way.

The Colography Group, a Georgia-based research and consulting firm, says in 2005 more than 56 percent of all overnight air shipments and 66 percent of second-day air shipments moved less than 350 miles. That is well within the range of less-than-truckload operators, of course, and major LTL carriers covet that shorter-haul market.

"The domestic heavyweight air freight market is roughly $5 million of which we estimate that over $2 billion is deferred air freight," said Jon Langenfeld, an investment analyst with Robert W. Baird Equity Research.

That market, whether next-day, second-day or even same-day, includes numerous carriers that test the limits of transportation's traditional boundaries, offering expedited service with the basic tools of traditional trucking.

Forwarders and truckers "are customers and competitors. Yellow Transportation is a customer of ours," said Andrew Clarke, president of Panther Expedited Services, a time-critical trucker based in Seville, Ohio.

"The issue is that nomenclature is less important. Whether you call it expedited or ground, customers are service- and price-sensitive," Clark said. "The issue is, do you need to get air freight to get 500 pounds 500 miles knowing a cargo van will get it there? The same is true at 1,000 pounds or 2,000 miles, when you may not want to put it on a cargo van knowing the rate per mile when you can combine the shipment with another and ship by air.

"What you have to do is solve customers' problems."

Forwarders and shippers say trucking companies have improved their service and reliability over the past decade, helping push that drive of air shipping to ground. Some are responding by using those trucking services, but they also are responding with their cost-saving services.

"Over the last several years, we've seen traditional air freight business moving to the ground carriers," said Gene Malcolm, senior executive vice president at Pennsylvania-based forwarder Pilot Air Freight. "We'd hoped that trickle had stopped but it is still going strong. It's forced us to offer our own ground services."

Pilot created a division for ground service that manages the forwarder's own dedicated trucking system and the forwarder's use of outside services.

"LTL is a tool for forwarders," said Joe Perez, director of ground transportation for Pilot, which runs a trucking hub out of Columbus, Ohio. The forwarder hires out its over-the-road trucking and manages its dedicated terminals. Pilot also has a truckload division, called Pilot ETS, with brokerage authority that they use to book truckload capacity while paying the carriers directly.

"The number of options for air freight has dwindled and that's forced us to run our own air freight LTL networks. We are a customer of many LTL carriers - Old Dominion, Estes, FedEx Freight - but there is so much going on the ground it is very difficult to get the service you need.

"There is definitely a sincere effort on the carriers' part and the forwarders' part to work together. The carriers realize we can provide a lot of business," Perez said.

But even with new LTL expedited services and their own trucking operations, many forwarders and airlines still take the airport road on board a truck driven by Forward Air, the Greeneville, Tenn.-based air freight trucker that dominates the market.

Forward Air's airport-to-airport linehaul market has more than tripled in the last decade, to some $300 million last year.

The company has grown partly by acquiring smaller regional players, but Forward Air also has managed to chase out other competitors that have sought to duplicate its success. Truckload carrier U.S. Xpress dropped its attempt to launch airport-to-airport linehaul a couple of years ago, selling assets of that division to Forward Air, and the airline-owned Air Cargo Inc. business collapsed a few years ago.

It's a daunting history that keeps Panther Expedited and other truckers from considering launching similar efforts.

"That on-ramp is littered with dead bodies," said Panther Expedited's Clarke, a former chief financial officer at Forward Air.

Forward Air, industry observers say, simply has scale that is nearly impossible to match in the relatively limited universe of air freight trucking without huge investment. With more than $270 million in operating expenses last year, Forward Air spent around like $1 million a day in 2006 simply to run its air freight network, not a big financial barrier for a large LTL carrier but a daunting investment in the smaller world of airport-to-airport trucking.

"There might not be enough (air freight trucking) to go around for more than Forward Air and the other regional players that are out there," said O'Neil. "For someone to come up and be a huge competitor they are going to have to come out of the box with a full service that mirrors what Forward Air does."

Brian Clancy, a principal in the Arlington, Va.-based MergeGlobal consultancy, says Forward Air has grown because "they get the best customers. When you look at what their customers charge for air freight, the relative price elasticity of airlines and forwarders means that the trucking component is a relative sideshow in the total economic equation.

"I believe there is no reason a high-quality LTL carrier can't play in that market," Clancy told a recent meeting of truckers organized by SMC3, a trucking industry organization. "There is no reason you can't replicate the same model."

But for LTL carriers, the Forward Air operation also highlights the boundaries between their own industrial trucking operations and the airport-to-airport business.

"When you look at the airport-to-airport road feeder services, what the LTL carriers do is completely different," said O'Neil. "Logistically it is a similar situation, yes. But the LTL infrastructure typically is not the same, not as finite."

For airport-to-airport trucking, forwarders generally pick up and drop shipments at terminals, giving them more flexibility on when they handle shipments for shippers. Road feeder services serving air shippers also are simply near airports, giving forwarders the flexibility to get goods on airplanes - or not.

"For airport-to-airport business, you can't provide that tremendously far from airports," said Satish Jindel, a principal of the Pennsylvania-based SJ Consulting Group. "The difference between 30 minutes from the airport and 10 minutes is critical. The truckers don't have the hub-and-spoke network built around airports, and that creates a barrier."

Truckers, say industry experts, will have to build their attempts to get more of the premium-priced business that goes to air cargo operators on more tailored services outside the traditional LTL operations.

"Shippers believe they can get more personal hand-holding from the freight forwarder than they can get from traditional LTL carriers," said Jindel.

So far, says Jindel, LTL has gone after the "low-hanging fruit" of traditional air freight. "To capture more of that market, the truckers will need to act in a more targeted, specific way toward those shippers, not in the traditional way. They will have to do pickups at different times, provide delivery in a more customer-specific manner and ensure transit times have more consistency across lanes."

Still, trucking companies say the combination of bundled services ranging from nuts-and-bolts truckload to LTL and tailored services can be a powerful selling point to shippers.

"Why do we even call it air freight when it isn't necessarily mode-specific? A forwarder calls it air freight but it can be a three-to-five day or deferred service," said O'Neil. "Time-in-transit being equal, it's who you're talking to, really. But customers are becoming more educated on how this works. Most of our customers don't make the distinction."

One distinction shippers talk about privately is claims, however.

Because true air shipments generally move quickly through dedicated pipelines, and may even be in an aircraft rather than in stop-and-go traffic on bumpy roads, shippers believe they are less subject to theft and to damage they can incur in the journey through higher-volume trucking networks.

"That may be true from a perception standpoint," said O'Neil. "But (trucking) carriers are improving their reliability and reducing their claims, and they are doing a good job of convincing customers they are reliable and secure. As we look at the future, it is going to be harder to differentiate" between air and truck services."

That's because O'Neil sees the larger trends in logistics bending toward surface transportation.

"We are seeing supply chain customers carrying more inventory, increasing their use of distribution centers. The more that happens, the less true air freight is needed, and then you add in the unknown of security issues that are so important to air. And we see customers under a lot of pressure to cut costs. The quickest way to do that is to cut air."