Michael Fritz is a freelance writer. By Michael Fritz
Newsday, July 14,1986
 

THE BEST THING that could happen to New York's $300-million courierindustry, as Irving Seiden tells it, is the elimination of all bicyclemessengers.

"The business has always been competitive," said Seiden, a 49-year industryveteran and president of Copy Clearing House Messenger Service on MadisonAvenue. "You keep alive on the basis of your service." But now that commercialbikers have supersaturated the market, he laments, "one delayed package -  even due to bad weather  -  can cost you an account."

Indeed, while demand for messenger services is booming, competitionbetween upstarts and established services has generated courier rate wars.Many owners point to the industry's ease of entry, where a phone number,an address and $20,000 have started countless companies.

In the last half decade, the city's five largest couriers  - Archer Services, Choice Courier, Empire Messenger, Fleet Messenger andPerfect Courier  -  have sought new strategies for marketingtheir services and sustaining growth.

Almost all have invested hundreds of thousands of dollars in advancedcomputer systems to upgrade phone links among branch offices, monitor servicequality, track profitability and provide detailed customer billing. Othershave created niches by offering 24-hour service and uniformed couriers,or have expanded into related businesses.

Empire, whose 1,200 messengers make 6,000 daily deliveries, is spendingmore than $750,000 this year to upgrade its phone, billing and package-routingequipment. In April, the courier joined with Eastern Airlines to offersame-day courier service between Boston, New York and Washington, D.C.

Choice, which makes more than 7,000 daily deliveries, says it will pay$1 million over the next three years to bring a computerized order-entrysystem on line in offices in nine U.S. cities.

Fleet, with 800 employees handling 4,500 daily deliveries, may diversifyinto the executive limousine business. Perfect, founded seven years ago,employs 700 messengers in New York and also operates an armored car unitand guard service.

Isidore Immerman, executive director of the Association of MessengerServices, a group that represents 30 couriers in the five boroughs, estimatesthat more than 350 services operate in the city. A recent survey of theNew York Yellow Pages found that 45 new companies opened their doors lastyear.

But for every five companies that enter the industry, four will likelyfail within two years, said Nancy Cooper, a vice president of the Associationof Messenger Services who struck out on her own four months ago to formCreative Carriers, a 23-messenger bike service on West 18th
Street.

Messengers' approach toward selling their services has also grown moreadvanced. While small- to medium-size services continue to rely on word-of-mouthand occasional direct-mail promotions, larger companies are assemblingmarketing teams to promote services from on-premises delivery crews toentire facility management staffs for operating client mailrooms, copycenters and truck fleets.

In just three years, facility management has gained popularity amongthe city's banking, communications and legal communities. Rising insuranceand employee-benefit costs are key incentives, said Edward Katz, presidentof Choice.Couriers have embraced the concept since it requires less administrativeoverhead. Three hundred messenger accounts may generate $1 million in annualbillings. One mailroom contract can represent $300,000. "It's our fastestgrowing area," said Stanley Katz, chairman of Archer, whose 2,600 employeesmake 8,000 daily deliveries nationwide.

"We've experienced 50-percent growth in the last three years."

Burson Marsteller is typical of the trend toward facility management.Four months ago, after consolidating four New York offices into one building,the advertising and public relations giant signed Choice Courier to staffan on-premises messenger center that delivers as many as 1,000 packagesper week. "Price had a lot to do with our decision, but we wanted betterservice," said James Kaplove, a vice president of the agency. Burson'snew contract includes a one-hour delivery guarantee within Manhattan. For the majority of couriers who are too small to win large corporate accounts,the intensity of the competition for the standard $5.50 express job ispalpable. Delivery rates have changed little in three years despite risingcosts, estimated at 15 percent annually. Like other heavy users of insurance,couriers have been forced to absorb dramatic hikes for carrier coverage.

Last year, Born to Run Courier Service on West 15th Street paid $600to insure its fleet of motorcycles, trucks and bicycles. Now it says itpays $7,000.

Courier owners also point to difficulties in leasing office space. "Nobuilding owner wants bicycles traveling up and down its elevators," saidWilliam Goodman, president of the Association of Messenger Services andpartner in Service Messenger Service. "They would rather give us basementsor store fronts. But there's little of that property we can afford in Midtown."

Marsha Stone, a one-time Archer Services manager, launched Blue StreakCourier four months ago from a basement on West 47th Street. "We are lucky,"Stone said. "We got a three-year lease on one of the nicest blocks in Hell'sKitchen."

Since profits depend on high sales volume, couriers are reportedly turningto discounting and extreme sales tactics to win high-volume accounts. "We get at least one blind solicitation every day," said Kaplove of BursonMarsteller. "If a competing courier knows you're paying $6 a delivery,they'll come in at $5.50 just to get your business."

"Payoffs are rampant," said Stone of Blue Streak. "A salesman will approacha potentially large account  -  one that does 100 runs a daywith billings of $2,000 to $3,000 per week  -  and ask, how muchit will take to gain the account?"

The re-emergence of bicycle messengers amid the city's 1980 transitstrike and the growth in service industries have spurred much of the industry'sexpansion. Five years ago, there were only 500 commercial bikers roamingthe streets of New York, Cooper said. Today there are more than 4,000.

"The bicycle represents a different kind of messenger; one not dependenton public transportation," said Seiden. Because bikers pay no transit faresand park free, they often have lower operating costs than other couriers,he said.  The proliferation of bike services and pressure to cut expensesmay also be prompting couriers to skirt the law. "Many bikers are beingpaid as independent contractors," said Stone of Blue Streak. Employersdon't deduct withholding taxes, she said, giving bikers a fatter checkwhich few report at tax time. But independents don't have the protectionof employee benefits. "So when they're hurt on the job, the issue of workers'compensation becomes a gray area."

Police statistics show that, in 1985, 6,108 accidents involving bicyclescolliding with vehicles or pedestrians produced 5,592 injuries and 26 fatalities.

Still, the industry outlook is not all bad. "Despite all the new companiesopening, business at the moment is very good," said Goodman of ServiceMessenger Service. "Plenty of people expected electronic mail to bringdoom for the industry, but that hasn't been the case."

"Electronic mail can't replace the messenger making the delivery," saidKatz of Choice. "You can't deliver blood to a hospital or send a mechanicalto Newsweek through a wire."

"You learn to live with the competition," said another courier.

"This is New York.''