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Online sales boost for couriers

Large courier and delivery companies are ramping up their expansion plans to cope with the boom in online sales.

With Australians spending a whopping $14.3 billion online, in the twelve months to September 30, transport and logistics companies are adding more drivers and trucks at a furious rate. Fastway Couriers is expecting to have an additional 100 vehicles on the road in the next month, adding to the existing 700 that are currently operating, according to the Australian Financial Review (AFR).

Fastway CEO Richard Thames has told the AFR that volumes are up by around 25% at the company’s Sydney depot compared to last year. As a result, the company has introduced two delivery cycles each day for all of its 25 hubs around Australia.

Couriers Please, another large courier business is also expanding. The company, which is 100% owned by New Zealand post, has around 600 vans delivering parcels across Australia. CEO Harlis Malkic has told the AFR that there has been significant volume growth all year, with a further spike occurring in late October. Mr Malkic says it’s a very competitive business, with hundreds of other companies and contractors trying to grab a bigger share of the market.

Australia Post has a broad distribution network, and has contracts with the online businesses of department store retailers David Jones (ASX: DJS) and Myer Holdings (ASX: MYR), but there are a host of online retailers that need parcels and larger products, including appliances and even furniture delivered.

Customers want choice when it comes to deliveries, with more and more opting for ‘leave it at the door’ option or delivery to a parcel locker, while also specifying shorter delivery time windows such as three hours, rather than a specific day. Fastway Couriers has also adopted Saturday deliveries, making it easier for the many consumers who are away from their homes during the week.

Foolish takeaway

Investing in the transport sector while online sales are booming may be akin to selling picks and shovels to miners during a gold rush. Investors might want to run the ruler over the sector, including small cap stocks CTI Logistics (ASX: CLX) or Lindsay Australia (ASX: LAU).

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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