US domestic ground parcel category is headed for a record year in 2005

• The US domestic ground parcel category is headed for a record year in 2005 with shipments poised to exceed the four billion mark for the first time and with revenue approaching US $25-billion, which would also be an all-time record. The Colography Group Inc. made the forecast in releasing its third quarter and nine-month 2005 analysis of the US domestic ground parcel and less-than-truckload (LTL) sectors.


At the same time, U.S. domestic regional less-than-truckload carriers continued to gain share of the LTL market, holding an 82% share of shipments as of September 2005 compared with a 78.5% share at the end of the fourth quarter of 2004. The lone national LTL trucker, the former Yellow Roadway now known as YRC Worldwide, saw its share fall to 18% from 21.5% in that time. However, the market share decline was in the national carrier operations of YRC Worldwide, which are comprised of Roadway Express and Yellow Transportation. YRC Regional Transportation, part of YRC Worldwide, did not lose market share during that period. Yellow Transportation’s market share was flat during that time, while Roadway Express’ market share declined.
Through the first three quarters of 2005, more than 2.99 billion ground parcel shipments moved in US commerce. Should the market match the 1.08 billion shipments moved in the fourth quarter of 2004 — a likely prospect given the fourth quarter is usually the industry’s busiest — volumes would crack the four billion barrier. The current record was set in 2004 at 3.938 billion.

Domestic ground parcel revenue through the first nine months exceeded USD 19.2 billion. Matching 2004’s fourth-quarter revenue of $6.5 billion would push full-year 2005 revenue above the US $25.billion figure.

The revenue gains over the past two years have been driven in part by fuel surcharges imposed to offset the impact of escalating oil prices. In the first quarter of 2004, domestic ground parcel average revenue per pound, or yield, stood at US $0.60. As of the third quarter of 2005, yield was at US $0.63.

On an absolute basis, DHL Express delivered the most impressive performance through 2005’s first nine months. During that time, it transported 94.2 million ground parcel shipments; in all of 2004, it moved 103.3 million shipments. However, it remains to be seen what impact the service issues surrounding the integration of DHL’s two US hubs — most of which occurred in the fourth-quarter — will have on the company’s domestic shipping activity for the rest of 2005.

The Colography Group does not publish final data until 90 days after the close of each financial reporting quarter. Thus, official fourth quarter and full-year 2005 results will not be available until early April.

US domestic LTL traffic through the first nine months totaled 97.04 million shipments, on pace to surpass 2004’s total of 127 million but short of the all-time record set in 2000. Revenue for the first nine months exceeded US $16.4-billion and, barring a complete collapse in the fourth quarter, will break the all-time record of US $20.2-billion set in 2004. The impact of fuel surcharges is a key factor behind the revenue gains. Tonnage gains in 2005 are likely to surpass 2004’s total of 136.5 billion pounds but will fail to set an annual record.

“The song remains the same,” said Ted Scherck, president, The Colography Group. “Regional LTL and ground parcel activity continued strong, while national LTL struggled to hold share. We see nothing on the horizon to reverse this trend. US shipping has moved to a regionally-based, surface-driven model, and there is no turning back.”

Among the key findings in The Colography Group’s U.S. Domestic Surface Traffic And Yield Analysis By Competitor and Market Segment, UPS held 68.1% of the ground parcel shipment market as of September 2005, by far the largest share. UPS, FedEx Ground and DHL Express all gained share over year-end 2004, though DHL Express’ share, despite its impressive shipment growth, declined sequentially through the first nine months of 2005. Much of the overall gains apparently came at the expense of the US Postal Service, whose share of the market fell from 11.4% by the end of the 2004 fourth quarter to 8.4% at the end of the 2005 third quarter.

The Con-Way regional network showed robust share gains during the 2004/2005 period, climbing to 11.9% of shipments in the 2005 third quarter from 9.5% at the end of the 2004 fourth quarter. Con-Way’s performance was the best of all the regional truckers tracked by The Colography Group.