Executive Summary
When a business wants to have something delivered across town that must get there the same day, it is usually a messenger service that gets the call.
These companies employ drivers, cyclists and even walkers to deliver documents, letters and packages across Los Angeles. They can usually provide same-day service and sometimes service within the hour, unlike larger overnight services such as Federal Express.
Most companies provide at least two of the most common delivery services: routed and on-demand. Routed contracts provide for routine service between two destinations on a set schedule. All of the companies on this week’s list provide on-demand service one-time, spur-of-the-moment delivery. Many companies will contract with one messenger service for all of their on-demand and routed services. Messengers will give discounts based on the volume of work done for the client.
The industry is waiting on legislation that would resolve a dispute between messenger services and the IRS involving the way freelance drivers are paid. Historically, most courier services have broken down the payment as half wages and half reimbursement for driving expenses. The IRS ruled that unless a courier can demonstrate all expenses, all money paid to the driver would be reported as wages and subjected to income taxes. New legislation introduced last month would create a formula to determine expenses.
The Pacesetter
The top messenger service on this week’s list, Century Express, has more than 250 drivers and makes an average of 3,500 local deliveries every day. In just the past year, the 3-year-old company has consolidated its offices in Los Angeles and tripled the size of its facilities.
Century officials say they have increased total revenues from $12.5 million in 1997 to about $17 million in 1998, despite a slight reduction in the number of deliveries. “We have been focusing on higher earnings, as opposed to high volume,” said Eric Scott, vice president and co-founder. Century has introduced a no-stop delivery service, meaning only one client’s packages are delivered at a time (rather than a courier making several stops on a route to pick up and deliver packages). The cost is higher than a normal delivery, but Scott said clients have reacted very positively.
The strongest area of growth, however, is in trucking, an arm of the company for transporting merchandise. Trucking revenues have increased by 20 percent over the past year.
Scott, a child actor (he played Ben on “The Waltons” for 10 years), started Century with two other partners about three years ago after acquiring a half-dozen messenger companies. He plans to focus on maintaining Century’s on-demand service and concentrating on no-stop deliveries, which have grown considerably over the past year. The company is also moving its trucking business into other states planning to open offices in Phoenix and Texas in the near future.
