challenges facing express delivery services in canada's urban centres

Institute of Housing & Mobility
Challenges facing the EDS industry in Canada's urban centres
TABLE 9: FLEET STRUCTURE OF FIRMS GENERATING MORE THAN $1 MILLION IN REVENUE
Source: Statistics Canada – Catalogue no. 50-002-X
Major challenges faced by the Industry in Canada
Given the structure and composition of the industry, the profit margins are very thin. The
operating ratio of 0.92 suggests that operating expenses constitutes 92% of the operating
revenue. With these slim margins, every penny counts for the industry and any shock to its cost
structure, from either increased expenses or a decline in revenue, is likely to have devastating
impacts on its profitability and long-term sustainability.
In 2008, the industry was exposed to uncertainties resulting from fuel price volatility, which
caused most couriers and same-day messengers to raise prices using fuel surcharges. However,
such measures often result in shippers switching to other relatively inexpensive alternatives to ship
parcels and packages.
The industry also experienced an increase in costs resulting from ever-increasing congestion in
urban areas, which often causes unscheduled delays for an industry that makes its money from
being on time and where every second counts.
As of late, the couriers and same-day messengers are increasingly concerned by millions of
dollars in parking fines issued by municipal administrations. These parking fines are issued to
drivers who park their vehicles on streets primarily because no viable parking facilities are
available in the vicinity. The sustained increase in the amount of fines cannot be treated as a cost
of doing business anymore. This report attempts to determine how the industry operates and how
much attention is paid at the municipal level to understand the needs of couriers and same-day
messengers, which are different from the needs of less than truckload (LTL) freight transport
modes because of the time-sensitive nature of the couriers' business that computes times in minutes
rather than in hours or days.
Already operating on tight margins, any increases in overhead costs, including increased fuel costs
or parking tickets, limits the ability of the industry to reinvest in their infrastructure. This prevents
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