747400sp
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Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 7:28 pm

I been wondering, if an airline with the same one narrow body fleet type a/c ideal like WN, that mostly service with in the US maybe Canada, Mexico and Caribbean, work as a package cargo airline, like Fed Ex?
 
isitsafenow
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 7:31 pm

If you wanna copy FEDEX, you need to go out and buy or lease about 250-300 Cessna Cargomasters, which feeds the big birds nationwide.
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fxramper
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 7:46 pm

Quoting isitsafenow (Reply 1):
If you wanna copy FEDEX, you need to go out and buy or lease about 250-300 Cessna Cargomasters, which feeds the big birds nationwide.

  

Those age old 72s still flying around help out too.   
 
747400sp
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 7:55 pm

Quoting isitsafenow (Reply 1):
If you wanna copy FEDEX, you need to go out and buy or lease about 250-300 Cessna Cargomasters, which feeds the big birds nationwide.
safe

I was thinking about a 737, A320 and C919 type of a/c.
 
aa61hvy
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 8:11 pm

Quoting 747400sp (Thread starter):
US maybe Canada, Mexico and Caribbean, work as a package cargo airline, like Fed Ex?

No, North American cargo is significantly down. In order to be a player you need your hand in China/Vietnam etc.

Not to mention the service provided by FX and 5x (to a degree) would be damn hard to match. Bottom line is, right now it's a two horse race. DHL learned this in recent years in the US. If you can't keep up, you're not going to make it.
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LAXintl
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 8:24 pm

No - because trucking and trains move the majority of freight in America, very cheaply and efficiently.

Air is simply too expensive for the majority of non time sensitive domestic freight.
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isitsafenow
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 8:25 pm

Quoting 747400sp (Reply 3):
I was thinking about a 737, A320 and C919 type of a/c.

I know, but in order to fill up the big birds, you gonna feed em with the little guys at the mini-hubs around the
country. In Michigan, FEDEX has one in FNT and UPS has a mini-hub in LAN which you have 8-10 small planes in
around 8PM to 10 pm and back out close to daybreak.
safe
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frmrCapCadet
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RE: Could A Southwest Type Fed Ex Work?

Mon Sep 05, 2011 11:04 pm

I suspect that FedEx and UPS already are the equivalent of LCCs. They simply have not let their costs get out of control.
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747400sp
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 12:49 am

Quoting isitsafenow (Reply 6):
I know, but in order to fill up the big birds, you gonna feed em with the little guys at the mini-hubs around the
country. In Michigan, FEDEX has one in FNT and UPS has a mini-hub in LAN which you have 8-10 small planes in
around 8PM to 10 pm and back out close to daybreak.
safe

Oh, I see what you are saying, and it make since.
 
HPRamper
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 1:09 am

There is a market, albeit a small one, for point-to-point same-day package delivery that in more of an open market would be free to exploit. However, FX (don't know about 5X) also runs a specialized service doing same-day, normally contracting with passenger carriers or occasionally ground transportation to effectively corner that market as well.

Otherwise, yeah there might be a large enough market between select large cities, but in competing with companies that can basically get a package from point A to point B, from dropoff to delivery in as little as 14 hours or so, you would have to offer something they can't, and/or more likely, *go* somewhere they can't. It would almost be like the EAS version of cargo, and would be quite expensive to operate.
 
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mayor
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:07 am

Quoting HPRamper (Reply 9):
However, FX (don't know about 5X) also runs a specialized service doing same-day, normally contracting with passenger carriers or occasionally ground transportation to effectively corner that market as well.

Well, FX doesn't actually contract with the passenger carriers.......they act like freight forwarders or consolidators and ship on the passenger carriers using those carriers' small package service. They've been doing that for years. The same is true with UPS.
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PanHAM
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 5:30 am

No. FX has invented the hub and spoke system and the whole concept is based on that.

As already mentiond, the bellies of passenger aircraft can be used for same day services and with the route structure of WN that offers plenty of opportunities. No need to establish a cargo carrier copying the pax airlines route structures when the belly capacity is there already.

It is all a matter of price and the same day next fliht out is the highest priced product. Next day comes "nect2 and whatever else is mostly shipped on level zero.
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blueflyer
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 7:59 am

Funnily enough, the one company that perhaps was the closest to what you are asking for is throwing in the towel this month. DB Schenker is shutting down the domestic air network it acquired when it merged with BAX Global. It was run essentially by DC8s from ATI and 727s from Capital Cargo. To avoid competing head on with FedEx and UPS, they were focusing on larger packages (25+ lbs) and specialized services such as trade shows. That wasn't enough to sustain them, and they will now offer only ground services for volume shippers (in addition to all other usual DB Schenker services of course).

Taking FedEx and UPS head-on nationwide require investors willing to sink in billions over a period of several years (perhaps a decade) to build out an air and ground network before you can get any competitive advantage from running a single-model fleet. They have regional competitors (I can think of OnTrac on the West Coast and Lone Star Overnight in TX, OK and LA), but they tend to use trucks almost exclusively (I think Lone Star has two ATRs) and obviously have a smaller footprint.

There are other nationwide players with their own aircraft fleet offering next-day service, but usually they focus on specific industries with tailor-made solutions and networks, such as flying in medical samples from various outlying cities to a lab in a central location for analysis (on a map, it may look like a hub-and-spoke network, but it could be a collection of point-to-point routes that all share the same destination). Of these, I think AirNet is the only one also offering its services to the general public.
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aa61hvy
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 3:33 pm

Quoting blueflyer (Reply 12):
(I can think of OnTrac on the West Coast and Lone Star Overnight in TX, OK and LA), but they tend to use trucks almost exclusively (I think Lone Star has two ATRs) and obviously have a smaller footprint.

They are only good in their niches. Good prices decent service, but frankly these local couriers are just a blip on the radar.
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enilria
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 3:38 pm

Quoting 747400sp (Thread starter):

I been wondering, if an airline with the same one narrow body fleet type a/c ideal like WN, that mostly service with in the US maybe Canada, Mexico and Caribbean, work as a package cargo airline, like Fed Ex?

The problem is that the market is price sensitive only in the 3+ day side of the market. That market is now mostly trucked. Trucking is very competitive.
 
Grid
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 3:55 pm

Quoting LAXintl (Reply 5):
No - because trucking and trains move the majority of freight in America, very cheaply and efficiently.

Air is simply too expensive for the majority of non time sensitive domestic freight.

It seems there is not a logical conclusion here. Why can FedEx and UPS succeed here along with a third entrant?
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mayor
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:08 pm

Quoting Grid (Reply 15):
Why can FedEx and UPS succeed here along with a third entrant?

That "third entrant" is already here.......it's called the Postal Service and it's not doing very well.
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aa61hvy
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:16 pm

Quoting mayor (Reply 16):
That "third entrant" is already here.......it's called the Postal Service and it's not doing very well.

They aren't on the same field as FX and 5x. FX carries a good chunk of the USPS cargo anyhow. The third entrant was DHL and as I said above it didn't work.
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LAXintl
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:24 pm

Quoting Grid (Reply 15):
It seems there is not a logical conclusion here. Why can FedEx and UPS succeed here along with a third entrant?

We already had other competitors such as Puralator, Emery, Airborne Express and DHL which all failed.

If you look at both Fedex and UPS financial reports, you will see its not the US market that is growing and earnings lots of money, its the overseas business.

In the US, per DOT barely 1% of domestic freight moves on planes. yes that is right - less than 1%.
Trucks and trains are by far the most efficient and preferred means to move good. Matter of fact in some cases they are even faster than planes - for example I can have something in San Francisco door to door via truck from Los Angeles faster that than I could via Fedex or UPS.

Trains and trucks are not only efficient, they are extremely low cost. There is simply no reason to pay air-freight rates for the 99%+ of cargo that is in no rush to get to its destination fast and can easily wait 1, 2, or 3 days.
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LAXintl
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:31 pm

p s -

If you have not noted, many airlines run extensive trucking operations themselves - especially in Europe (but also in the US)
Its simply cheaper to move it on a truck between cities than fly it.
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Grid
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:37 pm

Quoting mayor (Reply 16):
That "third entrant" is already here.......it's called the Postal Service and it's not doing very well.

Eighty percent of the USPS's costs are labor as opposed to FedEx's 35 percent and UPS's ~55 percent. I don't know what Southwest's labor costs are, but I don't think the postal service qualifies a SWA-style package company.

Quoting LAXintl (Reply 18):
In the US, per DOT barely 1% of domestic freight moves on planes. yes that is right - less than 1%.

Is that by weight, volume and/or value?

Quoting LAXintl (Reply 18):
We already had other competitors such as Puralator, Emery, Airborne Express and DHL which all failed.

If you look at both Fedex and UPS financial reports, you will see its not the US market that is growing and earnings lots of money, its the overseas business.

In the US, per DOT barely 1% of domestic freight moves on planes. yes that is right - less than 1%.
Trucks and trains are by far the most efficient and preferred means to move good. Matter of fact in some cases they are even faster than planes - for example I can have something in San Francisco door to door via truck from Los Angeles faster that than I could via Fedex or UPS.

Trains and trucks are not only efficient, they are extremely low cost. There is simply no reason to pay air-freight rates for the 99%+ of cargo that is in no rush to get to its destination fast and can easily wait 1, 2, or 3 days.

I think that is closer to supporting your statement but I don't see how the trucking and rail stats are relevant to the discussion. A third entrant could take market share from FedEx and UPS (though unlikely).
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HPRamper
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 4:51 pm

The only way to take market share from FX and 5X is to offer something they do not. Your own costs mean nothing to the consumer. The only things that matter are front-end price and product.
 
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LAXintl
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 5:06 pm

Quoting Grid (Reply 20):
Is that by weight, volume and/or value?
Air cargo accounts for a much smaller share of the weight and ton-miles of U.S. domestic freight.
According to the composite estimates, domestic air freight accounted for about 4 percent of the value but less than one percent of the tonnage and ton-miles.


Quoting Grid (Reply 20):
I don't see how the trucking and rail stats are relevant to the discussion.

Very relevant - to show there is not much and air-freight market in the US, when OPer is asking about starting a new venture.

Airplanes simply cannot compete against other more efficient modes of transportation in the domestic freight arena. Even UPS and Fedex move much of their cargo on trucks, matter of fact UPS inside the State of California is virtually 100% truck operation - almost nothing is flown.

Every US airline that had domestic freighter operations shed them - AA, DL, UA domestic freighters are all long gone.
In addition gone are other US general domestic freight airlines like Kittyhawk, Emery, AIA, Zantop, CF, Rosenbalm etc..

Outside of express shipments, and possibly perishables, air-transportation does not make sense domestically when you can reach coast to coast via rail in 3-4 days, and up and down the coast in a couple days via truck.
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flyby519
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 5:15 pm

UPS and FedEx have global networks and can leverage the profitable regions (China) against any tiny competitor in the US that is trying to take their business.

I'd be curious to see a competitor startup that leverages low labor costs against FX/5X here in the US. Look at the regional airline explosion partially because of drastically lower labor costs.
 
UA772IAD
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 5:42 pm

Quoting Grid (Reply 20):

Frankly, I don't see how a third could take a significant enough market share to pass on a low enough price to its customers. In the OPs scenereo, you would need a centralized location for the operation. Cargo does not move efficiently or cheaply on a point to point basis. You need hubs, and where you don't have them, you have to have regional distribution centers to receive and distribute freight to the final destination, or down to the next distribution center. You can't keep doing this all by air, or you might end up with a 737/32X flying one 5 lb box to an airport, and possibly returning to base empty. How is that sustainable to where you can pass on low costs to your customer?

This is where LAXIntl's discussion on rail and truck movements come to play. You can't move everything purely by air.

FedEx and UPS also have stakes/contracts with interstate couriers that carry freight where it can't be flown. Union Pacific, CSX, BNSF and NS among others, are major players in the field as well. Good luck giving them a run for their money

For consumers and the public, most settle for USPS, which offers very good flat rate prices on small parcels at about the same speed (delivery that is) as the logistics companies.

To the OP: is low cost referring to consumer cost, or operational cost structure? Or both?
 
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mayor
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 6:45 pm

Quoting LAXintl (Reply 22):
Every US airline that had domestic freighter operations shed them - AA, DL, UA domestic freighters are all long gone.



In DL's case, the dismantling of the "freighter" system had more to do with the advent of widebodies coming into the fleet than it did, losing customers. With the belly freight space available on the 747s, Tristars and DC-10s, it wasn't necessary to maintain the small freighter fleet, anymore.

Quoting LAXintl (Reply 22):
Quoting Grid (Reply 20):
I don't see how the trucking and rail stats are relevant to the discussion.

Very relevant - to show there is not much and air-freight market in the US, when OPer is asking about starting a new venture.

I'm thinking that the OP is talking about package "express" services such as FX and UPS, rather than bulk operations like rail and truck. I would think most of FX and UPS' service is still overnight or 1 or 2 day, rather than what the trucking companies or rail haul.

However, I would think that a "third entrant" would take business mainly away from the USPS rather than FX or UPS.

Quoting aa61hvy (Reply 17):
They aren't on the same field as FX and 5x. FX carries a good chunk of the USPS cargo anyhow. The third entrant was DHL and as I said above it didn't work.

DHL's problem was they never had the infrastructure that FX and UPS had. I still maintain that the other entrant was the USPS, long before DHL came on the scene in the U.S.

It's amazing to me that the USPS can't do better, financially, considering the advantages they operate with, written into their contracts with the airlines.
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FLY2LIM
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 7:17 pm

Quoting mayor (Reply 16):
Quoting Grid (Reply 15):
Why can FedEx and UPS succeed here along with a third entrant?

That "third entrant" is already here.......it's called the Postal Service and it's not doing very well.

As everyone knows, the USPS will be running out of money soon, and they bleed money worse than most legacy carriers ever did.
I have wondered how long it will be before a private carrier does most of the USPS's business, basically transporting all the mail and having the USPS employees sort it and deliver it. I can't imagine a private company wanting to build the infrastructure to deliver mail "door to door" or to set up post offices everywhere. But I can see a private operator take over most of the operations. It would save the government tons of money and help shed all those labor costs.

FLY2LIM
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mayor
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 7:23 pm

Quoting FLY2LIM (Reply 26):
I have wondered how long it will be before a private carrier does most of the USPS's business, basically transporting all the mail and having the USPS employees sort it and deliver it. I can't imagine a private company wanting to build the infrastructure to deliver mail "door to door" or to set up post offices everywhere. But I can see a private operator take over most of the operations. It would save the government tons of money and help shed all those labor costs.

Isn't most everything except for sorting and delivery, already contracted out?
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Grid
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 7:34 pm

Quoting LAXintl (Reply 22):
Very relevant - to show there is not much and air-freight market in the US, when OPer is asking about starting a new venture.

Airplanes simply cannot compete against other more efficient modes of transportation in the domestic freight arena. Even UPS and Fedex move much of their cargo on trucks, matter of fact UPS inside the State of California is virtually 100% truck operation - almost nothing is flown.

Every US airline that had domestic freighter operations shed them - AA, DL, UA domestic freighters are all long gone.
In addition gone are other US general domestic freight airlines like Kittyhawk, Emery, AIA, Zantop, CF, Rosenbalm etc..

Outside of express shipments, and possibly perishables, air-transportation does not make sense domestically when you can reach coast to coast via rail in 3-4 days, and up and down the coast in a couple days via truck.

I can where you are going. I was considering, since the original poster was mentioning a Southwest-airline model for parcel delivery, I was limiting my consideration to overnight, one-day delivery etc.
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PanHAM
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 8:08 pm

Quoting LAXintl (Reply 18):
In the US, per DOT barely 1% of domestic freight moves on planes. yes that is right - less than 1%.
Trucks and trains are by far the most efficient and preferred means to move good

Well, even trucks move on trains, in form of intermodal containers and trailers. You take bulk cargo like grain and chemicals, coal and intermodal plus - what you forgot - barges and usually pipelines are included in those overall figures as well and it is no surprise that the market share air cargo has is around 1 percent.

That is a global figure, which , depending on the region, is between 1 and 3 %

Quoting Grid (Reply 20):
Is that by weight, volume and/or value?

by weight of course. Volume is calculated into weight as well, but that goes for airfreight only.

.

Quoting mayor (Reply 27):
Isn't most everything except for sorting and delivery, already contracted out?

they forgot to contract the unions out. They are the reason for this desaster. All postal authroities in similar developed countries over the world have been turned into efficiently run privatized companies and are no longer a burden for the tax payer. Except one.

Quoting mayor (Reply 25):
DHL's problem was they never had the infrastructure that FX and UPS had. I still maintain that the other entrant was the USPS, long before DHL came on the scene in the U.S.

The real problem was that they entered an over regulated market too late to establish a foothold. UPS came to Germany around the late 70s early 80s and grew while the Bundespost was still nationalized and run as an authority. That was easy prey for a well run outfit like UPS. FX as well, came early enough to build up a system and they both were pretty much unchallenged in building up an internal European air system without too much interference. DHL fought an uphill battle on that front as well.
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jcs17
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RE: Could A Southwest Type Fed Ex Work?

Tue Sep 06, 2011 9:38 pm

Boxes and parcels tend to be more discriminating fliers who will pay a little bit extra for the upgrade in service, so no I don't think a Southwest type of FedEx would work.  
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