Is express shipping dead?

When it comes down to cutting transportation costs, many shippers are finding that speed doesn’t matter as much as it once did. Gary Breininger explains how courier companies are adjusting to new expectations.

With annual revenues in excess of $5.8 billion in 2009, there is no question that the courier industry represents an important component of the overall Canadian transportation and logistics industry.

Since the sector evolved in the early 1970s, the importance of speed of delivery has been one of its most hotly debated issues.

A big part of the reason the courier industry came into existence was the ability of early pioneers like Federal Express and Purolator (here in Canada) to deliver important documents and packages faster and more reliably than postal services. In this sense, the entire industry was founded on the concept of speed; the faster a shipment moved, the better.

For proof, simply look at industry growth rates during the 1970s and 1980s, when it was not uncommon to see express service volumes increase at two to three times the rate of non-express—mostly ground—services.

The need for speed today

In the wake of the recession of the past two years, the relevance of express deliveries and other expedited forms of transportation has been called into question. Faced with the harshest economic climate since the 1930s, logistics service buyers everywhere have been forced to ask themselves whether speed of delivery is really that important, and if so, how they can address this need while still effectively managing costs.

But express shipping is not disappearing. Even during the darkest days of 2009, there was a substantial express shipping market in Canada.

According to our latest estimates, annual express service revenues for Canadian courier companies in 2009 were just over $2.8 billion. That equates to 210 million pieces over the course of the year (or 834,300 pieces per day). This is a huge number of deliveries. In this sense it is clear logistics buyers still have a very large need for express courier services.

“Despite the economic challenges of the past year, express services continue to be used by sectors that depend on delivery speed as either a requirement of doing business, or a source of competitive advantage,” says Brie Carere, director of marketing and corporate communications at Federal Express Canada (FedEx).

“Examples include the pharmaceutical sector where products have a limited shelf life and the fashion industry where trends are always changing and getting goods to market as quickly as possible is key.”