SIC 4215 Courier Services Except Air

 
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SIC 4215

This category covers establishments primarily engaged in the delivery of individually addressed letters, parcels, and packages (generally under 100 pounds), except by means of air transportation or by the United States Postal Service. Delivery is usually made by street or highway within a local area or between cities. Establishments primarily engaged in furnishing air delivery of individually addressed letters, parcels, and packages, except by the United States Postal Service, are classified in SIC 4513: Air Courier Services, and establishments of the United States Postal Service are classified in SIC 4311: United States Postal Service.

NAICS CODE(S)

492110

Couriers

492210

Local Messengers and Local Delivery

INDUSTRY SNAPSHOT

In the mid-2000s, courier services were a multibillion-dollar U.S. industry. In 2004 alone, industry leaders United Parcel Service (UPS) and Fed Ex reported over $61.3 billion in revenues and employed almost 580,000 workers. Approximately 8,900 establishments operated within the industry. About 60 percent of these firms were local messenger and local delivery services, and the remainder were surface or ground-based couriers. Courier services, which accounted for over 90 percent of all industry revenues, were dominated by the big names, including UPS and Fed Ex. On the other hand, local carrier and delivery services were highly diversified and tended to be smaller operations; the top fifty firms accounted for just a third of the sector's revenues.

ORGANIZATION AND STRUCTURE

The diversity of business activities performed by industry firms was reflected in the number of establishments for which courier service was not their sole business. For example, industry firms included bus lines, messenger services, armored car services, temporary employment firms, business-only couriers, food product delivery companies, bicycle courier companies, newspaper publishers, specialized bank document couriers, couriers who provided "in-house" service for business clients within a single office building, and a wide variety of smaller firms. The vast majority of industry firms serviced local markets—for example, a single urban market and its environs—and offered no air delivery service.

The U.S. ground courier industry delivers packages and parcels generally weighing from 70 to 150 pounds for business and residential customers. The types of delivery available range from overnight (or "next-day") service to two-day and three-to-five-day service with a range of additional services such as international delivery, same-day intercity air delivery (packages picked up in the morning and delivered before 5:00 p.m. that day), and even express overnight service to Europe by 8:30 a.m. the next day. While overnight air service was increasingly the most dominant delivery service provided by air couriers, same-day, two-day, and three-day ground service remained a significant source of revenue for industry firms.

The industry continued to offer a wider range of services and rates to capture the many specialized niches of the package shipping market. For example, UPS introduced five new rate tiers based on commodity density, also later adding a tier for light and bulky parcels. One such service, accepting packages weighing 100 pounds or more, helped UPS and other carriers compete with the small-package niche of the less-than-truckload (LTL) segment of the trucking industry, which transported consolidated loads from different shippers that consisted of individual packages of 500 pounds or less. These traditionally general freight carriers began reacting to the ground couriers' cooptation of their small package business by adopting the same operating strategies that helped the leading couriers dominate their industry: local pick-up and delivery of small packages and parcels, the creation of geographical distribution networks or hubs, and the use of tracking software and high-tech sorting facilities.

The leaders of the air and ground courier industries maintained extensive networks of drop-boxes and staffed drop-off centers in addition to providing on-site package pick up. In 2005 UPS had 1,000 customer service centers, 17,000 authorized outlets, and 40,000 drop boxes. UPS purchased the shipping center chain Mail Boxes Etc., Inc. (MBE) in 2001. By 2004, MBE consisted of some 1,500 worldwide locations, more than 75 percent of which were located in the United States. Another 3,700 MBE were renamed as The UPS Store.

In 2004 Fed Ex purchased Kinko's, Inc., renaming them Fed Ex Kinko's Office and Ship Centers. Kinko's provided Fed Ex with over 1,200 retail locations and allowed the company to expand into the pack-and-ship sector as UPS had with MBE. The company also had 890 global service centers, almost 7,000 authorized Ship Centers, and over 41,400 drop boxes.

In 2005, the UPS delivery network consisted of more than 600 aircraft, 88,000 vehicles, and 1,748 facilities. The company serviced more than 200 countries and delivered 14.1 million parcels and documents each day in 2004. By comparison, in 2005 Fed Ex had 671 planes, 71,00 vehicles, serviced 220 countries, and had a daily volume of about six million shipments per day.

BACKGROUND AND DEVELOPMENT

UPS was formed in 1907 as American Messenger Company, a telephone message service in Seattle, Washington. In 1913, the company changed its name to Merchants Parcel Delivery when it began delivering small parcels for local department stores. When the company changed its name again to United Parcel Service in 1930, it had expanded its service areas to...

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