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
Recent Developments
Mar 2, 2023 - Diesel Prices Remain Volatile
- Retail diesel prices were decreasing in late February after rising steadily during January. The weekly US Department of Energy/Energy Information Administration price for February 27 decreased 8.2 cents a gallon to $4.294 a gallon. It was the fourth consecutive week in which the benchmark price used for most fuel surcharges fell and the 13th time in the past 16 weeks. The price dropped 32.8 cents a gallon during the previous four weeks.
- Decreasing retail diesel prices have been driven by pump prices catching up with earlier declines in futures and wholesale diesel prices, according to trucking industry news site Freightwaves. Some analysts see price increases ahead, however. Goldman Sachs’ head of commodity research Jeffrey Currie expects higher prices by the end of 2023. “Our conviction in the bull case has never been stronger,” Currie said. He cited a lack of significant spare capacity in markets and low inventories for most crude and products, with the result that “you have no buffer to deal with the rebound in demand that is likely to come out of China. As China starts powering ahead, that is going to tighten up the bull market.” He also cited what he forecast as “strong” economic activity in Europe.
- 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 skyrocketed as travel restrictions become laxer. "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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