Courier Services: The Fastest Consolidating Industry In North America
The courier industry has gone through numerous changes over the years, starting with homing pigeons, runners and horseback riders and evolving into a modern day industry with several large players, less mid-sized players and countless small and fly-by-night operations.
Four years ago, I had the pleasure of brokering a successful transaction which saw the family-owned and operated AAA Express sold to Jared Stekel. The Mississauga based company had grown from its 1969 beginnings as a taxi company into a very successful mid-sized courier company offering numerous levels of service from cars all the way up to 53-foot trailers, primarily within the GTA as well as throughout Ontario.
How the modern day courier company is structured greatly affects its success or failure. The current primary method of employing drivers is to not employ them at all, but rather contract them as independent brokers. This provides both the company and the broker with a great deal of flexibility. The company does not have to incur the additional expenses associated with owning a fleet of vehicles and staffing them, while the broker remains independent and can provide driving services to other companies. However, this does lead to the requirement and challenge of the courier company to develop ways to manage its fleet of independent brokers to ensure that their clients are being serviced and the obligations of the organization are being completely fulfilled.
Technology continues to play a vital role in the success or failure of today’s courier companies. If a company does not invest in the latest technologies, including advancements in dispatch to driver communication, hand held devices for signature capture (now required to be hands free), GPS, an advanced user friendly website, search engine optimization strategies and keeping both their hardware and software current, they risk failing to provide the higher and more complex level of service that today’s clients are demanding. Staying informed on changing local laws (i.e. the requirement for hands free devices, new parking laws) is also vital to ensure the safety of the drivers and the community at large.
During the past four years, I have regularly touched base with Jared and am thrilled that he has been able to implement all of the strategies for success as outlined above. His background, education and formidable network have enabled him to build on his experiences of owning other successful companies.
Whenever I pose the question to him regarding Uber and the thought of that organization entering the courier industry, without hesitation the response is always one of no concern.
There have always been fly-by-night couriers and clients whose only interest is cost savings. However, the majority of courier clients, especially the very large ones, are primary interested in ensuring that their clients’ needs are being met. While price is a factor, serviceability is what separates successful from non-successful courier companies.
Infrastructure must be in place to meet the high demands and Uber is not the type of organization which can supply multiple cars, vans and trucks to a single client all at the same time. In addition, clients are looking for easy communication with their carrier as well as a direct and “real” person that they can contact if there is a problem or issue. Uber’s corporate structure does not provide for the necessary accountability that clients require when they are looking to ship thousands of dollars in product with every shipment.
The massive courier industry is a stable and competitive one. It is consolidating faster than any other in the service industry. Some experts have speculated that the six largest courier companies internationally will only be two by 2022. The large mid-market companies which total over 137 in North America will be only 51 by 2022. Those that will benefit from the consolidation of courier firms will be the smaller mid-market companies that are responsive and provide great service at very competitive prices. In the M&A business, those most sought after are the courier companies.
Mark Borkowski is president of Mercantile Mergers & Acquisitions Corp. He can be contacted at www.mercantilemergersacquisitions.com