Courier and Messenger Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,000 courier and messenger services in the US provide express delivery, by air or ground, of documents and parcels within and between cities. Messenger services provide local delivery of documents and parcels as well as groceries, alcoholic beverages, and restaurant meals.

Volatile Fuel Costs

Firms with a fleet of delivery vehicles incur fuel costs that can fluctuate significantly from year to year.

Stiff Competition

The courier segment is dominated by FedEx, UPS and DHL, which have strong brand recognition, national delivery networks, and are easy to contract.

Industry size & Structure

A typical courier firm operates from 1-2 locations, employs 191 workers, and generates about $22-23 million annually. The average messenger firm operates from a single location, employs 38 workers and generates $1-2 million per year.

    • The courier and messenger services industry consists of about 8,000 companies that employ about 957,000 workers and generate about $102 billion annually.
    • The courier segment is highly concentrated with the four largest firms representing 91% of revenue. The messenger segment is highly fragmented with the 50 largest firms representing 45% of revenue.
    • Large courier companies include FedEx, UPS, and DHL. Document and parcel messenger services, which operate locally, include Western Messenger (San Francisco), NY Minute (New York City) and Pro Messenger (Dallas). Grubhub and DoorDash are technology firms that use an app and contracted drivers to order food from client restaurants and deliver it to local customers.
    • About 13% of establishments are franchises. Over 70% of franchised establishments are franchisee-owned.
                                Industry Forecast
                                Courier and Messenger Services Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Dec 2, 2022 - Diesel Price Remains High
                                • Gasoline prices have decreased significantly from the highs of mid-2022, but diesel prices are falling at a much slower pace. Courier and messenger services that rely heavily on diesel-powered vehicles continue to be impacted. The national average for regular gas was only up 8 cents year over year on December 1. Diesel was $1.51 higher year over year on December 1. Experts say that winter weather is playing a key role in keeping diesel prices elevated. The oils used in heating buildings are very similar to diesel. More of these oils are diverted to heating as the temperature drops, so there is less diesel on the market.
                                • Retailers this holiday season are focusing on delivering packages to customers on specific dates, rather than competing on delivery speed, according to The Wall Street Journal. Experts say that a race for e-commerce delivery speed has narrowed retailers’ sales profit margins. Inflation-conscious consumers now dialing back their online shopping, however, so many retailers are focused on restraining the high costs of fulfillment and last-mile delivery. Online shoppers are now more willing to wait for certain deliveries, having gotten used to supply-chain disruptions at the height of the COVID-19 pandemic, said Terry Esper, associate professor of logistics at the Ohio State University’s Fisher College of Business.
                                • Courier services including DHL Supply Chain North America and logistics companies including GXO Logistics are increasing investments in robots designed to move inventory around warehouses, according to industry experts. The coming holiday season and an ongoing labor shortage are further accelerating adoption of the technology. DHL Supply Chain North America expects to use 2,000 robots in 2022, up from 1,500 in 2021, primarily for transporting goods around the warehouse, company officials said. GXO Logistics said it expects to be using more than 5,800 robots globally by the end of 2022, up from 3,800 in 2021, while Kenco Logistics Services LLC plans to leverage roughly 120, up from 30 in 2021.
                                • Courier services are likely to be affected by a rebalancing of consumer demand. Some Americans, mainly high-earners, are reallocating their spending to experiences, says Kayla Bruun, an economic analyst with Morning Consult. Travel demand, for example, has sky-rocketed as travel restrictions become more lax. "There is a shift away from goods and to services, which is more Covid-related," she says. "People were locked down during the pandemic and they were spending more income on things around the home and now they prefer to spend their discretionary spending on goods outside the home."
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