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The Messenger
Business: Far More Than Bikes Now
New York Times, August 16, 1988
By Kurt Eichenwald
The messenger business home base for thousands of traffic-weaving bicyclists
with knapsacks on their backs is taking on bigger challenges.
Faced with pressures ranging from mounting insurance costs to competition
from facsimile machines, many messenger companies are leaving their bicycles
behind to transport items as diverse as organs for human transplant and aircraft
parts. Several larger companies have moved into the air courier business
and some are investing in sophisticated communications systems to keep track
of their diverse operations.
Many large messenger services are also taking over the mailrooms and messenger
operations of law firms, brokerage houses, banks and other businesses. "Corporate
executives don't want to get involved in fringe benefits, interviewing and
replacing people," said Edward Katz, founder of Choice Courier Systems, a
Manhattan-based messenger service company that provides these so-called facility
management systems. "This is what the messenger services are headed toward.
It's not just messengers anymore."
John I. Storm, president of the Messenger Courier Association of America
and president of Eagle Delivery Service in Weymouth, Mass., added, "As the
nature of the business environment has changed, we have evolved with it."
There are 8,000 to 12,000 messenger services in the United States, and many
of them take in revenue of more than $1 million a year. Total revenue estimates,
which are fuzzy, range up to $500 million, with the largest companies reporting
sales in the $30 million to $40 million range.
The services are concentrated in large urban areas. Some, like Archer Services
Inc. of New York, operate in several cities. Archer has 2,400 employees and
had revenues of about $40 million last year from 40 million deliveries, said
Stanley Katz, the president and chief executive.
The core business for Archer and most other messenger services remains the
transportation of envelopes and packages across town. But many of the larger
services are selling their bicycle operations to avoid insurance and liability
headaches, and are relying instead on foot messengers and cars. The bicycle
messengers are found now mostly in the medium-sized and small services. And
competition In that segment of the industry is hotter than ever.
In fact, growth of the entire field is hot. "Today, there are probably more
people going into this industry each month than went into it in the first
20 to 25 years," said Jack Rozran, president of Cannonball Inc., the oldest
and largest messenger service in Chicago. "That is because of the ease of
access and because It is perceived as a growing field.'
But industry officials warn that people entering the business who are not
aware of the challenges face almost certain failure.
"For every five services that spring up, four are going to go out of business,"
said Nancy J. Cooper, president of the Association of Messenger Services
in New York City and president of Creative Carriers Inc.
"As the business goes forward and people continue to add services, it will
become extremely difficult for new companies to start up," Mr. Storm said.
"They will have to spend a million bucks just to became competent in this
environment."
Some messenger company executives say the declining cost and growing use
of facsimile machines are leaving the companies little alternative but to
expand into other services.
"The telefax might interfere with our transfer of documents, but that just
means we have had to find other products." said Edward Katz of Choice Courier
Systems, which is based in New York.
Mr. Katz said his company had begun to transport eyes for cornea transplantation
and, in Florida, to deliver blood to hospitals.
National Courier Service, based in St. Louis, provides similar services.
Along with its traditional messenger service, National keeps heart pacemakers
ready for Immediate delivery to hospitals. In addition, the company carries
medical specimens from hospitals to medical laboratoties.
Many of the large messenger services have turned to delivering mechanical
parts for airplanes, tractors and other equipment.
"We do a lot of parts deliveries now," Mr. Rozran of Cannonball said. "A
lot of businesses, like copying machine companies, use us to precede their
service people and deliver the parts they need to an office."
Some of the new business is unusual. "We were asked to ship ice cream to
England for a reception for the Queen," said Mr. Storm of Eagle Delivery.
"So we made arrangements with British Airways, brought in dry ice and all
the rest, and messengered it over there." The request for the shipment was
made by a British holding company that had just bought Howard Johnson, Mr.
Storm said.
Such same-day-courier services are being offered by many large messenger
businesses. allowing companies to shipitems virtually anywhere by tapping
into a network of messengers.
For example, both Cannonball and National Courier operate same-day air courier
services at a cost of about $125. Prices vary depending on weight. By using
commercial flights and having messengers meet the planes, the services can
deliver shipments within hours, thus providing greater speed than the better-known
overnight carriers.
Such work involves specialized equipment. For example, National Courier rents
a United Airlines computer system to track its packages, said Irwin Leibowitz,
founder and president of National.
"Air courier is a natural outgrowth from our business," Mr. Leibowitz said.
"That puts us in the same-day business as opposed to being in the overnight
business.~~
In the air courier system, the service purchases what is known as an air
bill, which is basically a high-priority form of air freight. A messenger
picks up the package and drops it off at the airport, where It Is loaded
with passenger luggage. At the other end, a messenger delivers the package.
The equipment required for the air courier service is just one of the types
of technology that messenger services are using for their newer services
and to help in the operation of their traditonal service, industry off idaIs
said.
For example, Dial-a-Messenger in Dallas operates a radio computer system
In which terminals that communicate with a dispatcher are placed in delivery
vans. And Archer Services has a computerized tracking system for packages,
as well as a system that allows companies to call for a messenger by personal
computer.
Mr. Leibowitz of National Courier said: "It's almost like an old spy movie
with high-tech automobiles. That's the sophistication of some of the technology
we have today."
But industry officials say these developments present a significant drawback
for the entrepreneur looking to enter the messenger business:
Lack of money will prevent many of the traditional shoestring operations
from succeeding or even getting started.
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