US Domestic CEP Market Intelligence

*This report was last updated in Q4 2018. Please click on request customization if you are looking for an updated version of this report

Report Coverage

  • Porter's Five Forces Analysis
  • Latest News Updates - 2018
  • Producer Price Index
  • Contract Period and Payment Terms
  • Labor Structure
  • Impact of Labor Issues on Operations

Market Size


5.9 Percent

Market Size US

$92 Bn

Table of contents

  1. Executive Summary
  1. Market/Industry Analysis
  1. Pricing Components and Operating Cost Structure
  1. Sourcing Practices
  1. Labor Issues in the US
  1. Supplier Analysis

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Regional Market outlook US Domestic CEP Market

Top cost factors involved in delivering ground parcels in US

  • Labor: Labor cost consists of wages of drivers, sorting, pick-up and last-mile delivery. Asset- based companies experience relatively higher cost, mainly due to high expenses on employee pension and healthcare benefits offered to employees
  • Purchased Transportation: Non-asset-based couriers typically hire independent contract carriers to pick-up and deliver its shipments. FedEx is an example of such companies
  • Maintenance and Repair: Air carriers spend around 4–5 percent of their revenue, due to increased costs involved in the maintenance of airplanes, whereas, ground carriers spend around 2–3 percent of their revenue


Current scenario for strike by UPS employees and how it will impact the overall parcel market

Background on Proposed Strike by UPS Employees

  • The contract between UPS and its Teamsters expired on July 31st,2018
  • The current UPS labor structure involves full-time and part-time workers out of which two-thirds are part-time workers
  • Average earnings of full-time worker is $36 per hour whereas part-time worker is $15 per hour
  • UPS union has proposed increasing the part-time starting wage, improvement of the overall pay structure and also to increase contributions to health and welfare and pension funds
  • If the ongoing negotiation is not met, then proposed strike will be from August 1st, 2018

Impact of UPS Operations

  • UPS is the largest courier company in the US delivering 19 million shipments a day and UPS shipments account ~6 percent of the US' GDP
  • If this labor issue is not resolved then it would affect the US economy as this would be the largest strike in recent US history
  • In case of a strike by employees, UPS might lose customer confidence and they will try to switchover to FedEx and other regional players to mitigate the risk which is setback for UPS

Market Overview

The US domestic CEP market is expected to grow at the rate of 5.9 percent to reach $92 billion in 2018, driven by steady growth in the e-retail industry. With this growing market, client can expect service availability and increase in volume for 2018.New demand from general consumers and new operating models experimented by the existing suppliers are shaping up the market.

  • The US domestic, express and small parcel market is the major segment of the total CEP market. In 2015, the market experienced an annual growth of 6 percent to reach $77.4 billion, majorly supported by the e-commerce industry and the overall economy
  • The market is expected to grow at a CAGR of 5.9 percent until 2018 reaching a revenue of $92 billion by 2018, majorly supported by steady e-commerce sector and expected rebound in the manufacturing sector

Market Trends

  • Demand Shift:The B2C delivery segment is growing faster than B2B, majorly driven by e-commerce buyers. This has caused the carriers to expand product portfolio to cater to varied consumer demands, such as instant deliveries and locker services
  • Crowdsourcing Courier Service:Several on-demand couriers, such as UberRUSH, Zipments and Deliv, are entering the market, majorly disrupting the B2C and C2C delivery segments. They crowdsource taxi drivers, sub-contractors and casual labour to deliver parcels. The new approach is serving new consumer demands, such as faster deliveries at cheaper price
  • Emergence of Regional Firms:A number of regional service providers, such as OnTrac and Eastern Connection, which are providing cheaper, faster delivery options to Western and Northeast US states is emerging. These players compete against giants, like FedEx and UPS, in the B2C delivery segment directly

Pricing Components

The price of courier delivery service is primarily determined by the volumetric or actual weight of the shipments (whichever is higher), distance to be shipped and time of delivery. Typically, rates increase with the decrease in transit time. The final price is derived as follows:

Duties & Taxes:

  • The shipper is liable to pay all duties and taxes, including Value-Added Tax (VAT) or General Sales Tax (GST) for all the courier and express services availed

Fuel Surcharge:

  • An additional fee to offset the fluctuating fuel cost
  • It is a way to pass on increase in the  fuel cost to shippers, without changing the underlying tariff

Base Rates:

  • Base rate is the set of published rates on the carrier's rate card. It is determined on the basis of type of product, shipping distance and actual or volumetric weight for the chosen service
  • The rate typically includes all operational and market-related cost drivers, including cost of fuel, rentals, labour, marketing, etc.

Other Accessorial Charges:

  • Charges on return of undelivered consignments, change of address, packaging, shipment insurance, Saturday delivery/pick-up, etc.
  • Road tolls are applicable for consignments shipped through road transportation







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