Comprehensive Industry Analysis: Courier Services in Ghana

This report provides a comprehensive analysis of the courier services industry in Ghana. It begins with an introduction, outlining the industry's size, growth rates, and sales projections, including data from DHL, UPS, and FedEx. The report then delves into the industry structure, highlighting key players and their strategies, followed by an examination of the nature of participants and industry trends, such as the impact of e-commerce and technological innovations. Key success factors, including technology, human resources, pricing, and service quality, are also discussed. The core of the analysis utilizes Porter's Five Forces model to assess the industry's attractiveness, evaluating the threats of new entrants, substitutes, and the intensity of rivalry, along with the bargaining power of buyers and suppliers. The report concludes that the industry is attractive for business, despite high rivalry, and suggests strategies for achieving a competitive advantage through service differentiation. The report highlights the impact of digital transmission as a threat to the industry and provides insights into how businesses can improve their services.

COURIER SERVICES INDUSTRY ANALYSIS
1.0 INTRODUCTION
This chapter aims to provide an in-depth industry analysis of courier operators in Ghana, their
industry size, growth rates and sales projections over the years, industry structure, nature of
participants, industry trends, key success factors and assess the industry’s attractiveness using
Porter’s five forces model.
1.1. INDUSTRY SIZE
In Ghana, the number of registered courier operators by the Postal and Courier Services
Regulatory commission in 2020 totaled fifty-One(51). There are five (5) large registered
courier service operators, five(5) medium size registered service providers, twenty-nine(29)
small registered courier firms and only One(1) national postal service provider
(http:/pcsrc.gov.gh).
1.2. GROWTH RATE
There is high growth rate in this industry. The major industry players, FedEx, DHL, UPS
account for 60% of the industry’s revenue. Their growth rate for the year 2020 are as follows;
DHL 3.1%, UPS 5.5% and FedEx 4.1% (IBISWorld. Global Courier & Delivery Services
Market Size 2005–2026).
1.3. SALES PROJECTION
The estimated sales projection for 2020-2021 of DHL is €3.8billion, FedEx $40.0billion and
UPS is $899.7million (Globenewswire. Global Data Center UPS Market Report, 2020).

1.4 INDUSTRY STRUCTURE
The Courier and Delivery services industry is highly concentrated with larger and smaller
firms. Key players in this industry include FedEx Corporation, SF Express (Group) Co. Ltd.,
Deutsche Post DHL Group, United Parcel Service Inc. These companies have adopted several
strategies such as product launches, partnerships, collaborations, mergers & acquisitions, and
joint ventures to maintain their foothold in the market. This makes the industry highly
profitable for existing firms and new businesses.
1.5 NATURE OF PARTICIPANTS
The nature of participants in the industry are innovative. They are recognized for their
tracking features, speed, security, and transportation mode. They use software services to
provide electronic tracking details and electronic proof of delivery. In Ghana, the digital
address system is used by both smaller and larger courier firms to provide real-time tracking
of order and easier identification of locations. These innovative features used by courier
operators in Ghana makes the industry attractive and generates higher profits for firms.

1.6 INDUSTRY TRENDS
The demand for Courier service operators is booming around the world. Technological
innovation in courier service is making the headlines, and the market is becoming highly
competitive. Digitally-connected customers are believers of instant gratification, ease-of-use,
and seamlessness. Surge in demand from e-commerce industry has boosted the
global courier service market.
1.7 KEY SUCCESS FACTORS
 Technology and communication: The use of tracking devices on all orders helps
customers to find out where their order is and at what time they are going to receive it.
 Management- Human Resources is a very critical success factor since physical labor
is needed to drive vehicles, to load and offload, and other labor intensive activities
relevant to the courier industry. Better pay salaries and benefit packages must be
given to workers.
 Prices or rates - Successful courier service providers must find the right price to
maintain customers and give a good return of investment.
 Quality of Service- offering customers a quick, effective, flexible and timely service
designed to give maximum comfort to the recipient.
 Strong leadership: For a successful business good leadership, dedication and
commitment is important.
 Expansion of e-business: The business should find online shopping companies to
contract delivery of their products. Now the growth of e-commerce is very fast. The
business can enjoy both profit and brand name from this kind of expansion.
 Safety- Good storage facilities, insured and licensed drivers and motorcycles,
compensation policies for damaged goods must be provided to maintain customers
confidence and loyalty to the business

 Speed and efficiency: For small businesses time-definite package deliveries are
important for their business growth. This speed and efficiency will help the business
to grow within a short time and also add value to the brand
1.8 Analyzing Courier Industry Attractiveness using Porter’s Five Forces Model
Introduction: The firm used Porter’s Five Forces Model as a framework to analyze the level
of competition and attractiveness in the Courier Service industry based on five parameters.
Namely; the threat of New Entrants, threat of substitutes, Intensity of Rivalry, bargaining
power of buyers and bargaining power of suppliers.
Competitive Forces. Threat to Industry Profitability
LOW MEDIUM
HIGH
Threat of New
Entrants

Threat of
Substitutes 

Intensity of Rivalry 
Bargaining power
of buyers

Bargaining power
of suppliers

THREAT OF NEW ENTRANTS
The threat of New Entrants is low because of the cost of acquiring equipment, developing
national and international delivery networks , and overcoming entrenched firms in an already

crowded industry. MAGVIC courier services solution to overcoming these entry barriers is
by achieving competitive advantage through service differentiation strategies such as using a
software application that tracks orders, discounts to registered users on the company’s
website, same day delivery and offer rewarding loyalty programs to customers such as free
deliveries on holidays. This will help create a strong brand recognition and build a solid
customer base for our business.
THREAT OF SUBSTITUTES
The main threat to transportation of letter parcels is digital transmission ( Email, Skype,
Cloud Computing) and that threat is high. For instance, instead of delivering a hard copy of
the document over a period of days, an electronic version can be easily generated and
delivered within seconds from one globe to the other. But security issues such as hacking,
identity theft is thwarting the e-transmission of documents. Our company will provide
customers with the option of delivering the hard copy securely. The threat of substitutes for
transportation of packages is rather low.
INTENSITY OF RIVALRY
There’s a high rivalry among firms to compete in low pricing as the industry is heavily
concentrated. Firms globally offer similar courier services, but have to innovate and offer
differentiation to provide an array of services for variety at low costs. There’s a high fixed
costs because firms need to purchase vehicles, aircrafts, ships and infrastructure to facilitate
its delivery operations. Therefore, there’s high exit barrier as players who enter the business
needs to purchase or lease fixed assets and employ workers in order to conduct their
activities. The solution adopted by MAGVIC business is to offer sustainable service
differentiation strategies tailored to customers needs such as affordable prices, discounts and
offers, online support chat, refunding damaged packages and a well-trained staff to build a
long lasting customer relationship.
BARGAINING POWER OF BUYERS
The bargaining power of buyers is high because competitors in this industry provide
undifferentiated services and large commercial firms may use courier providers to transport a
massive volume of deliveries. Customers are spoilt for choices as they could conveniently

compare various prices that courier operators offer. Buyers may also choose to practice
backward integration, for e.g. producing their own supply chain activities and delivery
vehicles. MAGVIC courier service will focus on high customer retention by offering special
discount for large volume packages.
BARGAINING POWER OF SUPPLIERS
Suppliers demand cash and hence to acquire high end technology plus network improvement,
couriers incur huge debts. Suppliers with a lot of bargaining powers include owners of
trailers, and package delivery vehicles when rented. Other suppliers are manufacturers of
vehicle, motorcycles and airplanes who may raise prices on courier firms. Contracts can be
signed prior on cost of hire, purchase or pre-purchase agreements. Therefore bargaining
power of suppliers is high. It makes more economic sense for MAGVIC business to purchase
its own motorcycles and packaging materials from multiple suppliers.
After analyzing the Courier Delivery industry using Michael Porter’s five forces model, the
threat to new entry is low, proving that the industry is profitable and attractive for business.
Although the intensity of rivalry is high, our business will adopt sustainable service
differentiation strategies to make us gain a unique competitive advantage in the industry.
1.9 In Conclusion: The innovative and technological features adopted by both big and
small firms makes the industry modern and attractive for young entrepreneurs to venture
into.