While some say the slump Canada’s courier industry has been in over the past two years is a reflection of the country’s overall economic condition, others feel it is merely shifting to reflect the tough times.
Kal Tobias, president of the 116-member Canadian Courier Association, which includes small, same-day companies and the big overnight carriers, says the ‘double-digit’ growth the industry enjoyed five or six years ago has stalled.
Tobias, who is president and chief executive officer of the Toronto-based Canadian subsidiary of DHL Worldwide Express, says before the recession hit, the industry grew about 15% annually.
But he says for the last three years annual revenues have stayed at $1.4 billion.
Carol Salomon, senior vice-president of marketing for Purolator Courier, cautions the $1.4-billion figure is for traditional overnight courier service only.
Salomon estimates the same-day courier market, operated by smaller, locally run companies, is worth another $75 million annually.
Not stagnant
Dean Pope, director of marketing, small package products, for rival Priority Courier, says he does not believe the industry, which includes domestic, transborder and international categories, is stagnant or shrinking, but merely shifting in focus.
‘Companies are choosing slower delivery services instead of premium-priced, next-day products,’ Pope says. ‘They are economizing and will get by with two-day delivery as long as it’s guaranteed.’
Slower services
He says the move to slower services was precipitated by the economic slump, which caused businesses to move to the just-in-time inventory concept.
Companies are now storing less inventory and this has fuelled explosive growth in the small-package business and in next-day/a.m. courier products.
‘The distribution people knew they could rely on that next-day service,’ Pope says.
‘As courier services evolved and expanded into different services, shippers came to be able to rely on the whole range of services, two-day, ground-based, and expedited,’ he says.
Mike Tierney, vice-president, public relations for UPS, United Parcel Service of Canada, Toronto, says the lines defining the industry have become blurred over the years.
‘Some people think of a courier service as the guy on a bicycle going from one downtown office to another and that is, by definition, a courier,’ Tierney says.
‘In Canada, all of us are referred to as couriers,’ he says. ‘The line is a little bit blurred, but when you look at the major national couriers, we provide all the traditional services.’
Overnight courier companies
Most of the packages handled by overnight courier companies are for domestic delivery, amounting to about 85% of all courier business originating in Canada.
Salomon estimates 10% to 12% of the courier business in Canada is transborder, and about 6% to 7% represents international shipments.
Among the major players in the overnight category are top-ranking Purolator, with about 43% of the market.
Using 1992 figures, Purolator estimates its closest competitor is ups, with about 17% of the market, Federal Express Canada, with 13%, Priority Courier, with 9%, Loomis, with 7%, Canpar, with 6%, and others, with about 5%.
All, except ups, pick up the consignment on the day the call is placed for overnight delivery.
ups picks up the day after the order is placed for next-day delivery.
Purolator Courier
Canadian-owned Purolator Courier was bought by Onex Capital in 1987 and operates as one of seven Onex subsidiaries.
The company, which began as Trans Canadian Couriers in 1963 with a staff of two, now has more than 9,500 employees, 3,300 of which are couriers.
Toronto-based Purolator serves 9,500 communities across Canada and 75,000 communities in 167 countries worldwide.
It operates 3,500 courier vans, 280 highway trailers, 20 aircraft in Canada, and 57 planes in the u.s. through its partnership with Airborne Express.
The company also has a strategic international link with the Overseas Express Couriers network.
Salomon says Purolator has close to 160 retail outlets, 59 of them free-standing and one in every Purolator depot, augmented by the ‘dropbox network.
‘Ease of access is an important benefit, particularly with the proliferation of small businesses and residential businesses,’ she says.
Premium services
Salomon attributes the company’s growth to its focus on premium, branded services.
About two years ago, Purolator set out to identify the features and benefits of its services and brand them so they would be easily identifiable to consumers.
For example, its 9 a.m. Daystarter and u.s.am products are self-explanatory.
Salomon says that by branding specific services ‘we allow the customer base to understand our range of services.
‘If you segment the market into those customers who ship every single day, they’re fairly aware of how to access a courier and what products are offered, and pricing,’ she says.
‘Then there’s another segment which uses couriers less frequently.
‘They don’t have as well-developed a knowledge of courier services or details. Their main information source is via the media and promotion and via the courier.
Small business
‘And when you think about all the small businesses in Canada, it’s very important that the marketing function recognize the fact that there are a lot of people who are potential users or current users of courier services who rely on the media and promotion and the actual courier visit to get information about services,’ Salomon says.
Purolator competes by concentrating on service benefits, not price.
Salomon says it is important to help the customer understand the value and price/service relationship.
For Purolator’s contract customers, marketing provides the sales and image support material that helps the salesperson in face-to-face contacts.
New products recently developed by Purolator include Counter to Counter service at its retail centres.
Shippers send from one retail counter and, if it is more convenient than delivery, recipients pick up at the sales counter nearest them.
Perfect Shipping System is a product that was developed for large-volume shippers.
Purolator supplies software and hardware to its customers that can weigh, address and issue a manifest in seconds, reducing paperwork, eliminating errors, and cutting costs.
Says Salomon: ‘The advantage a Canadian-owned company has when competing with multinationals is they’re more flexible in their ability to respond to customer needs in a very short period of time. A multinational would have to go to a parent company for approvals for innovations and changes.’
A perfect example of this is a newly launched system that Purolator developed for Pitney Bowes of Canada.
Pitney Bowes wanted to make it easier for its customers to return cartridges for recycling, so Purolator developed Eco-pack, a special pre-labelled box.
Pitney Bowes customers put old cartridges in the box, affix the labels and Purolator picks them up for delivery to Pitney Bowes.
Salomon says the challenge is how to get the greatest mileage out of the advertising dollars.
A year ago, when Purolator introduced its Purotrakker scanner, it wanted to ensure customers understood that was now part of the business.
The company began by handing out cut-out cardboard scanners.
To generate further awareness in a way that would also build on its services, it developed a promotion called ‘Scan To Win.’
Customers using any premium service received a Scan To Win card. The courier used the Purotrakker to scan the barcode inside and the prize appeared in the scanner window.
‘It was fun for the customers, fun for couriers who enjoy interacting with the customers, and also heightened awareness of Purolator’s premium services and scanning capabilities,’ Salomon says.
The recent ‘Watch Us Perform’ promotion netted the customer a watch for sending five Daystarter product shipments.
The contest was an extension of Purolator advertising emphasizing the company is going to new lengths to make deliveries on time.
Purolator has had a product placement project running in Quebec for more than 13 weeks on a widely viewed, nightly tv talk show called Ad Lib.
Every Friday on the tva show, a Purolator courier delivers the list of guests for the next week.
Purolator is also sole sponsor of sports celebrity Don Cherry’s morning radio show, and a major sponsor for the past three years of the Telemedia radio network coverage of the Toronto Blue Jays baseball games. Also, Purolator is title sponsor of the Purolator Sports Challenge with the Telemedia radio network and The Globe and Mail.
Contest participants put together their own American or National baseball league team, track the players’ progress during the season and tally points to win weekly prizes.
Ideas and concepts for advertising and promotions are developed by the Purolator marketing department for follow-through by its agencies.
The company bases it strategy on research, some of which is paid, formal research such as questionnaires, focus groups, and studies.
Informal research involves talking to customers and couriers.
The marketing department meets weekly with courier groups, who have direct contact with customers, to discuss ideas.
UPS
ups, a 100% employee-owned company, was established in Seattle in 1907 for domestic u.s. deliveries.
Present-day headquarters for the global company, which has 2,250 branches in 185 countries, is in Atlanta.
The Toronto-based Canadian operation, which was set up in 1975, has 60 outlets and 5,000 employees across the country.
ups provides Air Express service within Canada and anywhere in the world and offers an Air Expedited product to u.s. and international locations.
The company bills this as an economical alternative to Air Express because it provides guaranteed two-day service to the u.s.
Ground services are also available in Canada and the u.s. and, internationally, within each of the countries ups serves.
Tierney says international delivery of packages is done entirely by ups, although he adds in certain remote areas existing service partners would be used.
Advertising is the primary way ups tells customers and potential users about its reliability and range of services.
Joe Tavares, marketing manager for ups, says the company uses ‘a wide range of communication methods to reach our customers – from direct mail through to traditional mass advertising in newspapers, magazines and radio.
‘We use whatever will do an effective job for us, and we plan to step up efforts in the future,’ Tavares says.
‘Each one of us is a consumer, so we also try to reach our end-user outside of the office, whether on their way home, or relaxing on the weekend,’ he says.
Training has become much more important over the years to courier companies as they realize their image is greatly affected by those on the front line.
ups delivery drivers go through 30 days of classroom and on-road training, as well as follow-up training.
‘We consider our drivers to be professionals,’ Tierney says.
‘They have a high degree of accountability,’ he says. ‘They are the people who are in front of our customers. They are the face of ups.
‘We have very high appearance standards for our drivers, which we’re probably recognized for more than a lot of other things.
‘We are also very conscious that they are out in their vehicles driving amongst other motorists. There’s a tremendous amount of safe driving training, defensive driving.’
Promote from within
Tierney says the company has a strong promotion-from-within policy so new salespeople, who get three weeks of initial training, usually know a lot about ups because they have come up through the ranks.
And while ups did not start to get aggressive in the area of technology until about six or seven years ago, it now has one of the most advanced tracking and tracing systems.
‘Technology in our industry today is really not an option,’ Tierney says. ‘To be able to serve the market, and the wants and needs of our customers, you need to have the ability to provide fast and accurate data.’
ups drivers have a computerized clipboard called a diad board, an acronym for delivery information acquisition device.
The diad, a result of ups research and development, not only scans and stores package information from the drivers’ perspective, it also outlines their optimum daily delivery route.
The ups industrial engineering department downloads each delivery route into the diad from delivery to delivery, including what streets to take and where to make turns.
The routes are set up with minimum left-hand turns because right-hand turns are easier and quicker. Drivers can override the diad and make a delivery in a different sequence.
Orders placed with customer service then move to operations for optimum routing.
When making a pickup, the driver places a barcoded number on the package and scans it for the first of several times during its trip.
Information stored
The scanned information is stored in the diad board for that package and all others carried by that driver.
When the package is signed for at delivery, the recipient signs the diad board and that signature is downloaded into the diad, eliminating paperwork.
When the driver is finished with daily deliveries, the diad is downloaded into the main system, contributing to the tracking and tracing capabilities.
A customer service representative will only need to key in the 11-digit number assigned to each package to quickly know the time, place of delivery and who signed for it.
Federal Express Canada
Federal Express Canada, which was set up in 1987, is a wholly owned subsidiary of 20-year-old Federal Express of Memphis.
However, the Canadian subsidiary considers itself a player in the international market, as opposed to just a domestic market courier.
Altogether, parent firm FedEx employs 80,000 around the world, including 70,000 in the u.s. and 3,000 in Canada, and serves more than 175 countries.
With the bulk of its business in North America, the main processing facility in Memphis handles more than 1.5 million packages a night.
FedEx operates its own transportation network in Canada, including three Boeing 727 aircraft.
Worldwide, it owns and operates 450 aircraft.
Lisa Elliott, manager of corporate communications for FedEx, says the company attracts customers who are shipping high-value, time-sensitive goods and documents.
It ships inter-city deliveries overnight, rather than the same day, and offers domestic overnight service with a 10:30 a.m. delivery commitment in most areas.
International deliveries are also made overnight, depending on origin and destination, under the brand name International Priority service.
International Priority Plus has been especially designed to provide overnight service between Toronto and London.
FedEx also offers its own customs service, which it has branded Express Clear.
In certain areas, such as the intra-European market, where it is not cost effective to have permanent operations, the company has established global service partners.
One such partner is TNT Express Worldwide, which handles its intra-European shipments.
Major centres
Shipments to major centres within Europe and Asia are handled via International Express Freighter jetline haul.
Packages are flown to a major centre in the destination country and then turned over to the global service partner to be delivered to the smaller centres.
The service partner later provides proof of delivery information to FedEx so the tracking function can be completed.
Elliott says FedEx maintains control over the packages with a tracking system called Cosmos, which gives the company real-time tracking capabilities.
As with most couriers in the segment, barcoded air bill numbers are affixed to each package.
Hand-held computers
The couriers have hand-held computers, and each van is equipped with a dads unit, an acronym for digitally assisted dispatch system, which is a computer terminal linked to the mainframe computer.
The units allow the customer service department to provide real-time information to the customer at any stage of the process.
The courier scans the package on pick-up and the information is then downloaded into the dads unit, which immediately transports the data to the mainframe computer.
Couriers with foot routes in areas such as large office towers carry a portable dads unit.
Looking to expand to other areas of the market, FedEx started a new division in the u.s. late last year, which Elliott says could be rolled out in Canada, if successful.
The new division produces catalogues for mail-order companies and follows through with distribution in North America and overseas.
The division offers complete production services, as well as translation services, strategic planning for the target market, and the calculation of prices in local currencies, including duties.
Warehouse in the sky
Business logistics services, which Elliott defines as a warehouse in the sky, is another new area that FedEx is moving into.
She says it is key in this economy for quick turnaround and just-in-time inventory management.
The business logistics service handles warehousing and distribution for companies such as those in the fashion, automotive and computer industries.
The inventory management service is available in the u.s., Europe and Singapore.
British-based fashion company Laura Ashley recently signed a European contract for FedEx to handle distribution of its products throughout the world.
Elliott says customers have found it more cost effective for FedEx to take over their distribution networks, which includes the installation of toll-free phone numbers.
‘Every company in the world right now is cost-conscious,’ she says.
‘There is sensitivity to pricing, so we try to be very competitive in that way. The overwhelming factor is good customer service and reliability.
‘The industry really sells two things.
‘One of those is the actual pick-up and delivery of time-sensitive documents.
‘On the other side, a lot of our customers use us for our information capabilities, comfort traces that reassure the customer that the package is moving as it should be.’
A system that really offers the customer comfort is Power Ship.
It gives customers access to the FedEx database so they can schedule their own pick-ups, do own their tracking and invoicing, bill back various departments, or re-cap a day’s shipments.
Top-of-mind
Promotions and advertising help FedEx stay top-of-mind.
Right now the company is running a humorous radio campaign that tells people their company will promote them if they increase efficiency and solve shipping problems by using FedEx.
Internal employee contests are also used to build business.
Elliott says the company is committed to training not only front-line staff, but management as well.
Couriers and customer service representatives undergo extensive classroom and on-the-job training.
Besides knowing how to use their own equipment, Elliott says they need to know about worldwide markets and customs clearance procedures.
FedEx has an internal tv network that airs a daily news show keeping employees up to date on changes in the system or customs regulations.
Every morning, aircraft delays and weather conditions around the world are reported.
Priority Courier
Priority Courier, with more than 8,000 retail outlets across the country, has been a Canada Post fixture since 1975.
Pope says the product has gone through some name changes since then, from Priority Post to its current positioning as Priority Courier.
‘It does all the things the other courier services do and, as well, the name overcomes the public’s perception that it is just a fast-mail product,’ he says. ‘It has evolved quite a lot beyond that.
Independent brands
‘It is positioned as an independent brand, with its own dedicated networks and facilities across the country in all the major centres, quite separate and distinct from the rest of Canada Post operations.’
Priority Courier’s advantage over the competition is that besides having a full range of courier services, it also has some postal features.
‘The combination of the two gives us an ability to provide a broader range of services than most of our competitors,’ Pope says.
‘The market is often looked at as the ability to pick up and deliver business-to-business. We’re strong and very competitive in that market, but where we excel, and where we’re the experts is in the consumer fulfilment business,’ he says. ‘Such as with mail-order firms.
‘We can courier to any kind of mail-order addresses. We have the distinct advantage of being able to go to a person’s physical address, such as 123 Main St., and also to mailing addresses such as post office boxes.
‘Other couriers cannot because they do not have access to the postal system.’
Because of links with postal administrations around the world, Priority Courier can also deliver internationally to mailing addresses, as well as to a customer’s door.
Last year, Canada Post entered a joint venture with five postal administrations and TNT Worldwide to form Global Distribution Express Worldwide.
Pope says it has been a constant challenge to overcome the poor image of Canada Post, branded by consumers as slow, costly and strike-ridden, but Priority Courier is doing just that.
‘We look at the business, and our branding strategies are evolving in this way, from the context that we sell time,’ he says.
‘Although that sounds very simple, a lot of our competitors sell mode of transport, such as air or ground service.
‘We’re moving away from those types of associations because what the customer really wants to buy is a guaranteed delivery time – next-day, two-day, three-day, and so on.’
Its next-day premium morning delivery product is called Priority Courier.
It also offers Commercial Air for parcels or Special Letter services, which guarantee next day by 5 p.m., or two-day delivery.
Its selection of next-day to five-day services is primarily one of ground-shipped parcel product.
In the next few months, Priority will move away from labelling the services as ground or air products, and will move toward a distinct branding strategy.
Priority Courier uses media advertising to improve awareness and encourage trial use of its products.
The company places advertising to reach the overall market in magazines, newspapers, and on tv and radio.
Its extensive database marketing program uses telemarketing and direct mail in complementary fashion to feed the database.
Pope says sponsorships and special events are also key to the marketing mix.
Olympics
Priority Courier was the official courier of the 1992 Olympic Games and he says that role did a lot to lift the image of the service.
This year, sponsorships include the Commonwealth Games in Kamloops, b.c., and local events such as the Quebec Winter Carnival, Winterlude in Ottawa, and the Calgary Stampede.
Besides business customers, consumers are a large component of the Priority Courier business.
Post offices are being transformed into retail outlets and merchandising centres.
‘The old post office days are gone,’ Pope says. ‘We’re gearing up to be a customer-driven company with our aggressive market presence, development of new products, and accessibility.’
This month, Priority Courier is launching a fairly intensive three-year training program for all staff – retail, commercial sales – with on-going training for management and couriers as well.
In the development of new business, Priority’s primary focus is the mail-order business.
‘We’re big supporters of the Canadian Direct Marketing Association,’ Pope says.
‘We have been following the evolution of the catalogue and mail-order business in the United States,’ he says.
Underdeveloped
‘In Canada, from our perspective, it’s extremely underdeveloped relative to the numbers you would look at in the United States per capita.
‘The growth of mail order in Canada, and our strength in providing mail order-based services, certainly makes it a key market for us at this point.’
Priority Courier has a trademarked track-and-trace mainframe system that scans the barcode on package from pickup to delivery.
The average package is scanned seven or eight times during its journey.
Canada Post’s national control centre in Ottawa operates 24-hours a day, seven days a week, and collectively manages the movement of all mail, courier and parcel products across the country.
If an Air Canada flight runs into weather problems, there is a contingency plan to move the shipments, and proper recovery methods are taken.
International express carriers
Companies that fall into this category are called integrated carriers because they provide total service – from pick-up, to customs clearance services, through to delivery.
About 75% of the shipments handled by Canadian integrated carriers have u.s. or international destinations, while just 25% of their business is in the domestic market.
DHL International Express
DHL International Express, which was set up in 1969, has its global headquarters in Brussels, offices in more than 200 countries and 28,000 employees worldwide.
The Canadian operation, which was established in 1977, employs about 350.
Tobias says dhl’s niche in the market is ‘the transborder market and the international outbound market.
‘We also provide domestic service, but that is not our core business,’ he says. ‘We are an international express carrier.
‘Our clients have the basic need to move product somewhere around the world.’
dhl’s express services outbound from Canada range from Express Documents, which handles packages weighing less than 250 grams, to small parcels, to larger parcels, and then to heavy air freight.
Tobias says the company will move any product that will fit through the doors of an aircraft.
The products are branded as DHL Express Documents; dutiable materials are called DHL Worldwide Parcel Express or wpx, and DHL Freight is for large packages to be shipped on pallets.
‘When someone commits a package to the dhl network, it stays within the network, irrespective of its destination,’ Tobias says.
‘Most other couriers with international capabilities tend to deal with agencies,’ he says.
Integrated system
‘We offer an integrated system with our ability to pre-clear customs anywhere in the world.
‘We have our own international telecommunications link through a dedicated system, and all of our facilities also operate their own in-house brokerage companies.
‘The material never leaves our system to go to a third party.
‘We have a tracking and tracing system that is proprietary to dhl that will track and trace material moving through our system, anywhere.’
dhl service includes assistance with the preparation of export documents. Upon reaching their destination, they are dealt with by dhl’s brokerage arm.
Tobias says all services are included in the price at point of origin, excluding duties and taxes payable by the consignee.
‘We quote service standards on everything we do by location of the delivery,’ he says. ‘We quote, dependent on the product, and every destination has a service time-frame attached to it.
Specific price
‘For example, from Toronto to London, England with delivery prior to 12 noon the next business day would have a specific price.
‘A document normally moves more quickly than a dutiable package. It also depends on value of the dutiable goods. With higher-value goods, you look at an additional day in terms of clearance.’
A new dhl product is helping Canadian companies move into the European marketplace without making a major investment in warehousing.
Express Logistic Centres have been opened in various parts of the world.
These are dhl’s own bonded warehouses, which provide storage, and at the customer’s request, onward, just-in-time, centralized distribution to their customers.
To reach its customers, dhl does a lot of direct marketing.
‘We focus in on the users, identified by industry segment, and then set up direct market programs for these people,’ Tobias says.
‘We use telemarketing extensively, and we also use business and trade magazines,’ he says.
‘We rate all industries, and code our customers by industry.
‘We regularly review all industry segments, and dependent on market conditions and our particular direction, we determine what industries we would heavy up on in terms of promotional activities.’
Over the years, the perception of couriers and customer service representatives has changed and training has become an important part of company strategy.
‘The customer has a greater need, and greater expectation of what the carrier should be capable of doing,’ Tobias says.
Tracking
‘The customer demands that we know where [their] package is, that we’re able to respond intelligently when they call customer service, that we can quote them prices, that we can give them service standards, that we can give them service time-frames,’ he says.
Technology has enhanced the ability of the industry to communicate information to customers.
It has also eliminated a lot of the error and the manual tracing that was required before computerization.
‘If I had to do a trace 10 years ago, I would have to telephone about a dozen locations to find out what happened,’ Tobias says.
‘Now, we know exactly where it is, when it was scanned in and out, and what the next leg of its journey is going to be,’ he says.
‘It makes us more productive. If you are more productive, you can do things more effectively, and more cost-efficiently. Then you can be more competitive in pricing.’
Refinement
Tobias says the industry has most of the technological basics of what is needed, and he predicts that what is going to come is really a refinement of these processes, especially with more global edi (electronic data interchange.)
‘We are moving in the direction of paperless systems and paperless trails, which will be computer-to-computer generated,’ he says.
‘That really is going to be the growth portion of our industry.
‘As our scanning technology becomes much more sophisticated, and as edi becomes much more prevalent, that will significantly enhance the efficiency and productivity and competency that we’re able to give back to the customer.’
TNT Express Worldwide
TNT Express Worldwide is a 50/50 joint venture between TNT of Sydney, Australia and GD Net BV of the Netherlands.
GD Net is owned by the postal authorities of Canada, Sweden, France, Holland and Germany.
The Toronto-based Canadian operation was founded in 1983 and now has 409 employees, a fleet of 70 vehicles and four aircraft.
Its annual outbound international deliveries are about 436,000, Canadian deliveries total 250,000, as well as more than 1.14 million kilos of international mail.
The company’s major thrust is international business.
Martin Brownhill, general manager of TNT Express Worldwide Canada, says that although the company’s service to the u.s. ‘is as good as anyone else’s,’ its specialty is destinations outside North America.
tnt has a presence in major areas in the world, with joint ventures in certain countries where it is not allowed to own companies.
Those joint ventures are with dedicated companies that market themselves as tnt.
Brownhill says contract logistics is one area the company is getting into as part of its philosophy of partnerships with clients.
tnt will set up warehousing operations anywhere in the world for its clients, and will take care of everything, including billing and receivables.
‘Another strategic part of our ability to help companies market overseas is IRS Products, which we’ve had for about three years,’ Brownhill says.
‘This service helps companies market by direct mail to other countries,’ he says.
‘For example, a direct mail company in Canada couldn’t include a business reply-paid envelope to be returned to Canada if it is marketing in France.
‘TNT sets up a post office box in France, empties the boxes daily, and sends the replies back through the tnt courier network.
‘Other clients use this system to do an annual customer service analysis of their client base. They send out letters, along with reply envelopes addressed to post office boxes in the various countries.
‘The advantage is that even if it isn’t reply-paid, respondents are mo
