Agoracom

Satish Jindel, principal of transportation advisory firm SJ Consulting, says that FedEx Custom Critical is the largest and oldest provider in this niche as it was founded as Roberts Express in the 1970s and was a unit of Roadway Services Inc. Since then, others have copied that business model with great success.

During the freight boom from 2002 to 2006, revenue in the expedited market was growing in the 10 to 12 percent range, according to Jindel. That has lessened to about 2 to 3 percent growth this past year, as all carriers have suffered a slowdown in growth due to industry overcapacity.

Revenue of the largest expedited carriers is only about a tenth of what a large LTL carrier such as ABF or Roadway Express now put on the top line. According to Jindel, FedEx Custom Critical posted revenue of about $278 million last year (parent FedEx Corp. does not break out revenue for this unit). Jindel adds that privately held Panther Expedited Services, the second-largest player in this sector after its purchase of Con-way NOW in 2006, will post about $250 million revenue this year. And Landstar Express America will post about $200 million revenue, according to Jindel’s calculations. But because profit margins are much higher than a typical LTL operation, the top expedited carriers are all solidly profitable, according to Jindel and other industry executives.