Courier Business Overview

Courier businesses transport packages, goods, and documents from local businesses to recipients, who may be other businesses or individuals. Couriers offer the advantage of fast delivery, package tracking, and a more secure experience than businesses might have if they used traditional shipping methods. Most courier businesses accommodate a wide range of goods, including a same-day document delivery or a more complicated large piece of equipment that requires special handling. Couriers transport goods by van, car, bike, foot, or plane.

Couriers may work with a variety of customers, but they typically have specific service areas that they know well. Pharmacies, veterinarians, realtors, lawyers, and many other businesses frequently use couriers for convenience and efficiency. Couriers don’t just operate during standard business hours but may also deliver at night.  Even though they operate in rural areas, couriers are often found in highly populated areas, like cities, where such time-sensitive deliveries are common.

Related: Checklist To Start A Business

How Do Courier Services Make Money?

Courier services earn income primarily through shipping fees charged to customers. These fees are calculated using formulas that factor in distance traveled, package dimensions, weight, and delivery speed requirements. For example, a 5-pound package delivered across town might cost $15 for standard service or $30 for same-day delivery. Businesses typically establish set rate structures for common routes and services while adding surcharges for special requirements.

Additional revenue sources for courier services include:

• Storage Services: Offering temporary package storage in warehouses or distribution centers for customers who need items held before final delivery
• Packaging Materials: Selling boxes, envelopes, tape, and other shipping supplies to customers who need materials for their items
• Insurance Coverage: Providing additional protection for valuable shipments beyond standard coverage
• Special Handling: Charging extra fees for items requiring temperature control, fragile item care, or signature confirmation
• International Shipping: Offering cross-border delivery services with customs handling and documentation support

Industry Statistics

The courier and local delivery services industry consists of businesses providing package transportation and delivery services. This industry falls under NAICS code 492110 – Couriers and Express Delivery Services. Here are some highlights about the industry.

Courier Industry Size & Growth: The courier and local delivery services industry generates $169.6 billion in annual revenue. Over the past five years, the industry has grown by 5.6% annually. Looking ahead, continued expansion of 6.5% annual growth is projected due to rising consumer spending and increased demand for delivery services from online shopping. (IBISWorld)

Number of Courier Services: Approximately 374,000 courier businesses are operating in the U.S. The industry includes both large corporations and small local operators. Two major companies dominate the market – FedEx Corporation earns $61 billion in annual revenue, while United Parcel Service (UPS) generates $57.9 billion. These two companies handle a significant portion of package deliveries. (IBISWorld)

Courier Services Average Profit Margin: Courier and delivery service companies see an average profit margin of 11.8%. (IRS)

States with Most Courier Services: The highest concentration of courier businesses is found in populous states with major metropolitan areas. New York, California, and Texas lead in the number of courier establishments due to their large urban centers and business activity. These states have extensive delivery networks to serve their dense populations. (U.S. Census Bureau)

Also See: Ideas for Naming a Courier Business

Costs To Start a Courier Service

Starting a courier service can range from $2,000 for a bicycle-based operation to $75,000 for a multi-vehicle delivery business. Small local delivery services using bicycles represent the most affordable entry point, while operations with vehicles require larger investments.

Here are some common startup expenses for courier businesses:

Transportation: The main expense varies significantly based on the delivery method. Professional delivery bicycles with cargo attachments cost between $1,500 to $3,000, while delivery vans range from $15,000 to $45,000, depending on whether they’re new or used. Many businesses start with one mode of transportation and expand as they grow.

Insurance: Bicycle courier insurance typically costs $500 to $1,000 annually, while commercial vehicle insurance runs between $2,000 and $5,000 per vehicle. Coverage needs vary based on the types of items being delivered.

Technology and Software: Delivery management systems, GPS tracking software, and mobile apps for tracking deliveries cost between $1,500 and $4,000 to set up. Monthly subscription fees for these services range from $50 to $200 per courier.

Equipment: Package handling equipment costs vary by operation type. Bicycle couriers need bags, racks, and weather gear, which cost $500 to $1,000, while vehicle-based services require additional equipment like hand trucks, dollies, and shelving, which can cost between $1,000 and $3,000.

These estimates provide a general idea of startup costs, but actual expenses will vary based on location, business size, and services offered.

Resources:
Customized Logistics & Delivery Association
Express Carriers Association