When "Next Day" Isn't Good Enough - It's Time For Same Day Delivery
Messenger Courier World Magazine - Winter 2008
by Satish Jindel

For decades, thousands of courier companies have quietly served the shipping community by handling their urgent deliveries and scheduled (dedicated and customized) delivery needs. These companies have managed the most critical shipments for mainly business-to-business service for on-demand pickup and delivery of most time sensitive documents and products within hours on the same day. Their value proposition - faster delivery than express carriers and often handling more critical and higher value (intrinsic or real) deliveries than most other segments of the cargo transportation industry.

Because there is no one large company like UPS and FedEx to bring public attention, this industry lacks awareness and respect from customers and other interested parties that should be expected from handling the highly valuable service that includes deliveries of paychecks, payroll statements, pharmaceutical drugs, organs for transplants and blood for transfusion needed for life saving medical operations. However due to the fragmented nature of this industry, it struggles to get proper pricing for its service. Shippers may not realize, but they find it acceptable to pay a much higher price to the parcel integrators for their overnight early morning services (that have a minimum surcharge of $28.50 on top of the overnight service charges), when in many cases, these services are slower than the services of the courier companies. As a result of such low rates paid to the courier companies for on-demand same-day premium service, these companies are unable to invest in marketing, new value added services and technology. These measures would enhance their ability to introduce standards for security of the delivery process and safety of such highly valued products desired by the same-day delivery service customers.

While UPS and FedEx, express parcel carriers, are now among the top household names, courier companies lack name recognition even in the business world. Few reasons for such lack of awareness may be:

• Few entry barriers have lead to the fragmented nature of the courier industry - and hence even the largest of these companies lacks critical mass to market the services
• Too many associations trying to represent the courier companies interest with media, policy makers, shipping community and investors and are thus diluting the impact of each organization
• Desire by many owners and managers of these companies to avoid attention on their business by government agencies or competitors - which also keeps them from gaining awareness with prospective customers who either learn to function without the benefit of this valued service or use known express carriers next day early morning service at a higher cost for a slower service.

Furthermore, the changes in the shippers' businesses and rapid adoption of technology, first with fax and now email has dramatically changed the customers' needs for courier industry services. Instead of documents (legal, financial, business contracts) being handled for intra-city delivery, the market now requires same day delivery of medical products, pharmaceutical drugs, lab tests, parts for critical business machines that are no longer delivered by a messenger on bike - but via a van or truck operated by a licensed driver. While some of the courier companies have tried to change, the industry has not recognized this market shift - and still carries designation that is not reflective of its value proposition.

So why care about the proper term for this industry. Here is the result of a web search using Wikipedia for description of a "courier":

"A courier is a person or company employed to deliver messages, packages and mail. Couriers are distinguished from ordinary mail services by features such as speed, security, tracking, signature, specialization and individualization of services, and committed delivery times, which are optional for most everyday mail services. As a premium service, couriers are usually more expensive than usual mail services, and their use is typically restricted to packages where one or more of these features are considered important enough to warrant the cost".

The courier companies and various associations still view themselves as being part of the courier industry. Since the speed of delivery is the most common attribute and primary reason for use of this service by the customers, a change to Same-Day Delivery would better portray the industry's service and value proposition. Such change would also differentiate it from express services of parcel carriers and heavy freight (LTL) carriers.

Most recently when FedEx announced that it was offering local pickup and delivery of parcels and freight in ten major metro areas, it referred to the service as "Same Day" with no mention of "courier" in the press release. Owners of some longtime courier companies are embracing such change and repositioning their companies for the new market. Claudia Post, the outspoken founder, of Diamond Courier in Philadelphia changed the name to Diamond Transportation for this reason. However, for an industry-wide change to take place, leaders like Velocity Express, Dynamex and BeavEx will need to put their combined weight behind such agenda.

These Big 3 companies can start by bringing together the several trade groups (Messenger Courier Association of America, National Transportation and Logistics Association and Express Carrier Association to name just a few) under one organization and seek adoption of a new industry terminology. These associations, based on their names, are sending confusing message on the value proposition of the core group of companies that are being represented by them. MCAA implies focus on courier companies that have either changed their focus away from courier or looking to reposition as broader local transportation service providers. NTLA by its name suggests inclusion of all transportation and logistics companies when that is not reflected by the list of members and attendees at its well-attended annual conference. And, it is difficult to take ECA seriously if the three largest express carriers (DHL, FedEx and UPS) are not members. The For-hire Trucking industry generating over $300 billion in annual revenues has one main organization, American Trucking Association, to advance its legislative, safety and public relations agenda. However, with less than $30 billion market size and several trade associations, the Same-Day Delivery industry will continue to be struggle for attention by customers, lawmakers, media and investors without rapid realization of changing customer needs.

With shippers interest in seeing more uniformity and standards among the carriers providing same day urgent delivery service, the Big 3 with experienced management team and greater capital resources, can help themselves and the industry with change from Courier to Same-Day Delivery and support of one association to represent the industry. With BeavEx' tagline "When next day isn't good enough" being so appropriate for its value proposition, it provides a ray of hope for adoption of similar message in one of these trade associations. Inaction on this subject has already opened the door for new companies (such as 3P Delivery) to aggressively penetrate the Same-Day Delivery Service market.

Satish Jindel is the President of SJ Consulting Group, Inc. (a transportation and logistics consulting firm) based in Sewickley, PA.