FROM THE MM&D MARCH/APRIL 2012 PRINT EDITION:
The economic recovery has officially come to the logistics industry—or at least to the courier side of the business
That’s the conclusion drawn by Gary Breininger of Brampton, Ontario-based Breininger & Associates in a survey of the courier market.
The Canadian Next Day or Later Delivery Courier Market Sizing Study—2011 reports there is growth in the sector.
“It’s encouraging that in 2011 our estimates suggest the market has gone past pre-recession levels, and by that I mean 2008 levels. So it has effectively emerged and it’s back on a growth tangent,” said Breininger.
Admittedly though, it’s a slow growth he is seeing.
“We’re certainly not talking about any great growth to write home about going forward. We feel that in 2012 the market might grow just under two percent, maybe one-point-eight or one-point-nine in terms of volume.”
But he adds that in a mature market such as North America, slower growth rates should be expected.
There were a number of factors pushing the growth, but perhaps the main one was the fuel surcharge companies are charging their customers.
“Fuel is a big issue on the minds of people managing supply chains,” he said. “In 2011, our estimates are revenue grew by over nine percent and a good portion of that growth is attributable to the fuel surcharge because fuel has been going up.
“With the fuel surcharge, we estimate the market revenue grew by just over nine percent. Excluding the fuel surcharge—I keep everything constant except I pretend there are no fuel surcharges—the increase in revenue was only 4.5 percent. That means forty to fifty percent of the revenue growth is attributable to fuel surcharge charges.”
While many of the numbers demonstrated growth, the numbers for express shipments were less than robust.
“The continued emphasis on cost control on the part of shippers is illustrated in the differences in growth for express versus non-express shipments. We’ve seen this trend for the last four or five years. It’s called de-speeding.
“Our 2011 numbers reflect the fact there is a continued emphasis on cost control and how that’s playing out is there is continued use of nonexpress services whenever and wherever possible. Growth rates are lower for express than they are for non-express.”
Thee report also finds that larger courier companies dominate the market and will increase their market share in the future.
“The big guys keep getting bigger. We feel that in 2012, the share of market represented by the non-majors is probably going to shrink by another half percent. There are lots of reasons why this trend has started and continues to carry on. The customers are looking for the best value possible. It’s no longer about just moving the goods from A to B. It’s about the bells and whistles and the value-adds. The visibility. The ability to do things online.
“I want to make it clear, I’m not suggesting that 10 years out it’s going to be a three- or four-company market. There are some very well established niche players that I think are going to do well, but they’ll do well because of the fact they’re niche players.”
For courier companies wanting higher rates of growth, they might want to turn to their international divisions.
“We think international growth outside of Canada, is going to continue. We think it will outpace domestic growth. Yes, it’s not as robust as it used to be in the heydays of the mid-2000s, but it’s certainly not like it was in 2009 in the middle of the recession.”