Intensifying competition has minimized price growth, but rising input prices are forcing suppliers to pass costs on to buyers
Los Angeles, CA (PRWEB) September 29, 2013
Letter and parcel delivery services have a buyer power score of 3.2 out of 5; the higher the score, the better negotiating conditions for buyers. Weak service differentiation between letter and parcel delivery service providers results in intense competition for most markets; however, lower per-unit operating costs for large suppliers have resulted in a concentrated market. Current major vendors include the US Postal Services, UPS, FedEx and OnTrac. Says IBISWorld procurement analyst Agata Kaczanowska, “The top three suppliers have largely comparable services and many buyers use all three companies as well as smaller regional delivery services.” Most buyers are familiar with such delivery services and the top suppliers, so they regularly compare prices and features to get the best deal on letter and parcel delivery services. As a result, intense competition is advantageous to buyers, especially high-frequency and high-volume buyers that have greater leverage.
Despite greater price-comparison shopping and competition, prices for letter and package delivery services are trending upward. Rising input costs and a shift from letter to parcel delivery are the main factors driving up the average price. “The shift from letter to parcel delivery can be attributed to the proliferation of online communications, which are leading to lower mail volume,” says Kaczanowska. “Online shopping is also booming, boosting demand for business-to consumer delivery services.”
Delivery services benefit from higher shipping volumes because suppliers are better able to plan for and consolidate multiple deliveries, which reduces the total delivery cost per item; buyers can leverage such cost savings for lower rates. Because prices and package delivery volumes are on the rise, buyers may benefit from establishing delivery service contracts earlier. On the other hand, buyers could miss out on their potential leverage with a supplier if their need for delivery services increases faster than anticipated and they are locked into a long-term contract. For more information, visit IBISWorld’s Letter & Parcel Delivery Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help buyers of letter and parcel delivery services. Letter and parcel delivery service providers transport mail and small packages domestically and from the United States to worldwide destinations. National and interstate courier and express delivery services, as well as universal service providers like the US Postal Service, are included in this report. This report excludes local courier or delivery services and general freight and logistics services for bulk items and shipments (typically heavier than 150 pounds). Related services like package insurance and post office box services are also excluded from this report.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.