Express Delivery Services

The US express delivery services industry includes about 12,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $75 billion. The industry is divided into large networked couriers capable of nationwide and international delivery, and smaller messenger services that transport packages locally. Large companies include United Parcel Service (UPS), Federal Express (FedEx), and Dynamex; these large companies also compete with the US Postal Service and foreign-owned DHL in international shipping. The courier segment of the industry is highly concentrated: the four largest companies account for 90 percent of the segment's revenues. The local messenger segment is highly fragmented: the 50 largest companies account for 35 percent of the segment's revenues.

COMPETITIVE LANDSCAPE

Demand is driven by business transactions and online consumer spending. The profitability of individual companies depends on price, reliability, quality, and services. Large companies compete by offering a wide range of services. Small companies compete through specialized customer service. The industry is labor intensive: average revenue per employee is about $140,000.

Collection, pick-up, and delivery operations can be performed with minimal equipment and facility investment, resulting in low barriers for new companies to enter local markets. As a result, competition can be high.

PRODUCTS, OPERATIONS & TECHNOLOGY

The express delivery industry primarily transports parcels that are small enough to be handled by a single delivery person without the need for special equipment; this differentiates the segment from the freight shipping ...