Technology changes messenger business.

Companies are now focusing on 'non-faxable' goods

The recession-troubled messenger service business is undergoing massive change, spurred by both the slack economy and technological advances, industry executives in Los Angeles County reported last week.

"There have been lots of messenger company failures this year; why, three companies filed for bankruptcy just last week," said Steven R. Hamile. The president of Glendale-based Chase Couriers Ltd. Inc., the third largest company on this week's List, also pointed to a number of messenger company consolidations so far this year.

(Ranking first on this week's List of the messenger service companies with the most employees in the county is L.A.-based Now Messenger Service. It is followed by: Burbank-based United Couriers Inc., second; Chase Courier, third; and L.A.-based U.S. Courier, fourth.)

The recession has been altering the practices of messenger service customers, Hamile said, indicating written paper may be a "dying industry."

To cut messenger service expenses, customers have decided they no longer need hard copies of documents delivered, he said. Instead, Hamile related, former customers are "faxing" documents between facsimile machines, which are connected by modems and telephone lines, or transmitting messages by "E-mail" between electronic computers, which are connected similarly.

Escrow and title companies are examples of former customers that have switched to fax, he said. The legal profession has a pilot program to use E-mail, which, if allowed to proceed, could have a "substantial impact" on law firms and their messenger services, Hamile added.

Electronic funds transfer by banks and other financial institutions, Hamile continued, is reducing their use of messenger service. At the other end of the technology spectrum, he said, banks are urging customers to make their deposits by mail, rather than having messenger services pick up such deposits.

Bank and savings and loan association consolidations have shrunk the number of branch offices, noted Michael Schneider, marketing manager of Burbank-based United Couriers Inc. That means fewer branches for canceled checks to be picked up at daily by messenger services to deliver to central processing offices, agreed John Ficht, president of L.A.-based U.S. Courier.

With their traditional markets evaporating, new ones are being sought by messenger service companies, executives said. They, for example, are seeking "outsourcing" business -- such as to run the mail rooms of other customers -- and to penetrate portions of markets long dominated by Federal Express and United Parcel Service.

Chase Courier, for example, is seeking to stake out niche communities in the "overnight service" business, Hamile disclosed.

To capitalize on its 36-office network and the 110 Learjet and Cessna aircraft of its sister company, Ameriflight Inc., United Couriers is concentrating more on its land/air small package overnight delivery service, Schneider said. (United Couriers just added a downtown L.A. office three weeks ago, he said, and plans to open a Van Nuys office in a couple months.)

By using Burbank as its hub, Schneider said, United Couriers can boast being able to make later pick-ups and still promise next morning delivery in the seven Western states. A midnight pick-up in L.A., for example, can be delivered next morning in San Francisco, Schneider asserted.

U.S. Courier is moving more into the transportation and distribution of "non-faxable" goods, Ficht said, such as greeting cards, other supermarket items, medical supplies and the like.

Non-faxable goods, indeed, may be the salvation of the messenger service business, company executives indicated, especially with other businesses striving to cut their inventories and thereby pare inventory carrying costs. Messenger service executives envision their filling a growing role to deliver merchandise and parts "just in time" to a broad spectrum of customers -- ranging from manufacturers to retailers and repair shops.