Business slides as clients adopt Net technology
By Robert Gutsche Jr
Special to the Tribune
October 13, 2003
Despite the continuing increase in parcels, business documents, promotional materials and other written information that must be handled and delivered, many small messenger companies are losing the battle with technology.
Since the late 1990s, companies have increased their use of e-mail, the Web, and cross-platform file-sharing formats like PDF files to transmit information--allowing them to send in seconds what a messenger would previously take much longer to deliver across the city with a bike or car.
Phyllis Apelbaum, president of Chicago's Arrow Messenger Service, said her business, and hundreds of other small messenger services nationwide, have lost clients to the Internet. It has forced Arrow and others to change their services or get out of the business.
"At first we saw there just wasn't a need [for as much courier service] and then we started seeing that spread," said Apelbaum, who added that the drop in "on-demand" courier service has finally leveled off.
Apelbaum estimated that Arrow has lost about 20 percent of on-demand delivery request volume since 2001. She estimated that it has also lost about 5 percent of its customer base to technology.
The U.S. Department of Labor estimated that the number of messengers would continue to drop through 2010 by at least 1 percent, according to its most recent job outlook.
In 2001, couriers and messengers numbered about 121,670. In Chicago there were 4,800.
To counter the loss--and limit projected losses--Apelbaum is spending more time and money building other departments of her business, mostly trucking services, and improving her online capabilities.
"We still have a really solid piece of on-demand business, and we will continue to have that business because those are smaller businesses comfortable doing what they have done," she said. "There is always going to be a need for getting things from point A to B, and we are just changing the mentality of the couriers in the long term to think about moving small packages to freight items."
It's tough to say how much these companies have really been hurt by technology, industry observers say. Few industry associations carry solid numbers on how businesses are faring, but individual companies say the Internet has made the industry more competitive--sometimes too competitive.
"Statistics are very hard to come by because so many of these companies are family-owned, and they don't like to give out information," said Bill Goodman, editor of Courier Times, an industry magazine in New York City. "But I can say for sure that the industry has really been hurt by technology."
Roughly 4,000 messenger and courier companies service mostly law firms, advertising agencies and hospitals, Goodman said. The Labor Department figures showed that in 2001, 9 percent of couriers and messengers worked for law firms, 10 percent for hospitals and medical and dental laboratories, and 29 percent for local and long-distance trucking firms.
Financial institutions, such as commercial banks, savings institutions and credit unions, employed 10 percent, while the rest were employed in a variety of other industries.
Goodman said not many messenger services have folded despite the economy and technology--but certainly, he said, the industry has not been growing.
"Most people, a few months ago, were down 20 to 25 percent in sales," Goodman said. "But somehow companies have found ways to diversify."
But sometimes even diversification cannot help.
Comet Messenger Service in Chicago was a growing business until 2000, when the economy turned downward and the Internet was making other businesses even more competitive, said Jim Sailer, the company's co-owner.
Workers laid off
Since then, he has laid off about 15 employees--leaving him with 60--and has seen a 10 percent to 15 percent loss in on-demand volume.
"It's always hard to sort out what's affecting you most," Sailer said. "Is it the Internet or is it the economy? My gut tells me our clients have dramatically changed the way they communicate with their clients. They just don't do near as much hand delivery as they used to."
Comet still has about 30 bike messengers and a fleet of 30 cars and trucks throughout the city. Sailer has not tried to add more to his businesses. He has just kept his company above water, he said, by not spending money to compete.
"Personally, I don't see [this industry] going anywhere positive," Sailer said. "If you're realistic about the future of the on-demand service, we see more and more of that being captured by the Internet."
Clients too have seen how the industry has suffered.
The Jackson Lewis law firm, a nationwide firm based in New York with offices in Chicago, Washington, and Boston, uses couriers daily, but partner Howard Bloom said there has been a "significant" move from using couriers to using e-mail.
E-mail "allows us to do some things less expensively and still be as efficient and as speedy as we might have been in the past," he said.
Regardless of their concerns about the confidentiality of cyberspace, clients want documents and letters more quickly than via couriers, Bloom said.
"Now that there is e-mail, the expectations that clients have of us are certainly much greater because it is quicker and we are expected to be doing these things quicker."
Companies retool
Some companies have moved away from on-demand services altogether, finding success elsewhere.
Eight years ago, Continental Courier in Broadview offered primarily on-demand courier services. Now that service makes up only 5 percent of the company.
"We saw that technology was going to make an impact on on-demand work," said Sharon Dalenberg, Continental's president and owner.
The company wanted out so badly that it spent between $50,000 and $80,000 on routing systems so it could transport packages and freight, including body parts and medical supplies.
"I think we saved our company," she said. "What's happening to those who offer just on-demand [service] is that there is fewer and fewer of them. They have a good market because we dropped out."
Robert Kotch, president of Breakaway Courier Systems in New York City, said he has dropped the number of bicycle messengers from 150 to 120 and hired 10 more truck drivers to deliver packages. His company has bought five small, failing messenger companies since 2001. In New York and Boston, many of his clients have dropped orders from 10 deliveries a week to one. Three years ago, he had about 10,000 orders a week; now it's about 8,000.
Because of the slumping economy and lack of business after the Sept. 11 terrorist attacks, businesses continue to find ways to permanently cut costs, he said. For many, using e-mail instead of a courier has done that.
Cheryle Williamson, executive director of Express Carriers Association, and owner of Interstate Courier Express in Allentown, Pa., said messenger businesses that are suffering now should have been prepared for the Internet.
"I thought people had already been moving away from that part of the industry," she said.
"Knowing the impact that the fax had when it came out a few years ago, some of the companies who had been doing foot and bike messaging, they definitely saw declines and should have started looking for other business."