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November 16, 2012 8:30 AM, EST
Same-Day Couriers See Higher Revenue as Demand From Retail Sector Grows
By Daniel P. Bearth, Staff Writer

This story appears in the Nov. 12 print edition of Transport Topics. Click here to subscribe today.

Companies that provide same-day delivery service are seeing higher revenue, in part because of surging demand from retailers, a survey by the Messenger Courier Association of America found.

Rob Johnstone, president of the trade group based in Washington, D.C., said 58% of respondents reported that revenue was either “much better” or “better today” than it was a year ago.

“Today’s retailers want to respond quickly to changing consumer demands, while at the same time keeping their inventory costs low,” Johnstone said. “Many have the expectation that they can order inventory at the close of business and have it on-hand when they open the next day. Our industry makes that happen.”

The survey also found 63.2% of the companies cater to retailers, compared with zero who said they supported that industry just two years ago.

“That’s a dramatic change,” Johnstone said.

Retailers like Wal-Mart Stores and Amazon.com have recently begun offering same-day delivery for goods purchased online (10-22, p. 1).

Other industry segments typically served by expedited delivery companies are banking, pharmaceutical, medical, third-party logistics, government and technology.

Only 10% of couriers who re-sponded to the survey said they rely solely on employee drivers. More than one-third (39%) use independent contractors to make deliveries.

“Success for those of us in this industry is heavily reliant on the ability to say ‘yes’ to our customers, no matter what or when they ask,” Johnstone said. “Over 90% of our members told us that on-demand deliveries are a critical part of their business. The use of independent contractors makes that possible.”

The industry is dominated by smaller companies, with more than 45% of firms surveyed having annual sales of between $1 million and $5 million. Most have been in business for 20 years or more, however, and 60% of respondents said they have the capacity to deliver goods nationally and regionally by making use of a network of agents.

Thomas Jowers, chief operating officer of ADL Delivery in Tampa, Fla., said he expects demand for same-day delivery to grow, not just from an increase in online shopping but from auto parts distributors, furniture manufacturers and other businesses.

“Everybody wants things right now,” he said in an interview with Transport Topics.

Jowers also said he expects couriers to get bigger to compete with parcel carriers like UPS Inc. and FedEx Corp.

“Larger couriers are buying up small guys,” he said. “There are some attempts to bundle the services of local couriers.”

MCAA represents an industry made up of an estimated 7,000 firms that offer expedited and same-day delivery services. Total revenue for the industry is estimated to be $8.7 billion annually.