TORONTO, Ont. – The Internet and the business that flows through it continues to drive more business to Canada’s courier industry, a Canadian Courier Association conference was told on June 1.

“I believe there is a shift going on,” said Gary Breininger, vice-president of the association. “We are now getting shippers saying, I don’t need an LTL or truckload carrier anymore because I just send JIT small shipments. This is an ideal scenario for the courier industry.”

But so too will it mean new challenges – today’s shippers want courier companies to offer “end-to-end, Web-based logistics solutions”, he said during the day-long conference.

Breininger said the growth estimates for E-commerce are “phenomenal,” and that will have a direct impact on the courier industry. Right now, he said, E-commerce transactions in Canada amount to about $571 million annually, “but that is expected to increase 10 times by 2010.

“The hype about the Web is justified,” he said. “I believe the Web is increasing our industry size by about three per cent a year.”

But, Breininger warned, companies that don’t invest in Web technology run the risk of falling behind the rest of the industry.

Although the CCA believes that Canada’s courier industry is growing rapidly, there aren’t any hard numbers that can accurately illustrate that growth. In fact, Statistics Canada only began collecting data on the courier industry in 1997, and comparative data from 1998 will not be available until later this month.

The 1997 study was designed to determine the approximate size of the courier industry in Canada, and to gain some insight as to the specific nature of the business, explained Robert Masse, the Statistics Canada project manager who was in charge of the first official study of the Canadian courier industry. Using Revenue Canada tax data, Masse said there were slightly more than 11,000 courier “establishments” in Canada in 1997. “This includes vehicle courier services and local messenger services,” Masse said.

The 1999 Transportation in Canada report just released by the federal government, however, showed that 80 per cent of all courier traffic is still handled by nine carriers.

Although there are far fewer courier companies (only about 1,200) than local messenger companies operating in Canada, they generate more than three-quarters of the industry’s revenue, according to Masse. Again, according to Revenue Canada data, Masse said the courier industry generated approximately $3.8 billion in revenue in 1997. To place the courier industry in the context of the transportation sector in general, Masse pointed out that the for-hire trucking industry generated approximately $15 billion in revenue in 1997, while air and rail transportation generated between $8 billion and $9 billion.

The study also showed that 86 per cent of packages sent by courier in Canada are bound for Canadian destinations, with 75 per cent of that going to Ontario, Quebec, Alberta and British Columbia. Of the remaining 14 per cent of courier packages, 10 per cent were bound for the U.S., and the rest for other countries. “What amazes me,” said Masse, “is that the industry makes about 1 million deliveries a day.”

Overall, the outlook for the courier industry is very good because of that electronically driven business, said Bob Johnson, vice-president of Procure.com Inc., a company that produces software that coordinates shipment orders for courier companies. “But the E-commerce boom risks being halted by logistics chaos.” As an example, Johnson cited the case of Toys R Us, which took in thousands of orders over the Web last Christmas, but was unable to make deliveries in time. To fulfill the promise of E-commerce, Johnson said, the courier industry is going to have to embrace the technology and become super-efficient.

“The transaction volumes will be phenomenal,” Johnson said. “Shipment sizes are getting smaller, customers are ordering stuff directly, people are being de-intermediated. It is a new way of handling business.”

In addition to the added business, the huge growth in the demand for courier services brought on by the growth in E-commerce will also bring new challenges to the courier industry – one of the most prominent of which will be attracting and retaining good drivers. Already a well-known problem in the rest of the trucking industry, the shortage of drivers has started to become an issue for courier companies as well.

“Last year I wouldn’t have believed it could get worse, but it has gotten worse,” Breininger said. “Guys feel they are working too hard now and they are looking for greener pastures. We have to find ways of offering extra value to the professional driver community.”

The extent of the problem was spelled out by Linda Gauthier, director of programs for the Canadian Trucking Human Resources Council, who gave conference attendees advice on attracting and retaining drivers. This is a “major problem” for both the courier industry and the trucking industry, Gauthier said, “given the human resources trends emerging right now.”

Gauthier said that over the next five to 10 years, the demand for company drivers is expected to increase be 10 per cent, the demand for owner/operators by 39 per cent, and the demand for leased drivers by 23 per cent. On the other hand, she pointed out, 20 to 30 per cent of the current driver population will retire within the next 10 years.

Another problem shared by both the courier and trucking industries is the state of the road system, said Harold Gilbert, chairman of the Better Roads Coalition, who spoke about the future of the road system in Ontario. Gilbert pointed out that while the provincial government used to fund construction and maintenance on some 50 per cent of the roads in the province, that has dropped to 10 per cent since the province “downloaded” much of that responsibility to the municipalities a few years ago.

“The province has not been able to give residents any assurances that the municipalities will be able to maintain the 90 per cent of the roads they now must look after,” Gilbert said. “They can’t ignore the fact that products move on 100 per cent of the road system. We feel that unless the funding is restored, there is going to be a big long-term problem.” n