When American Speciality Confections gets an order for seasonal candy from Target Stores, it has to act fast. In almost every case, the product must arrive within a three-day delivery period at the retailer's distribution facility.

To meet these tight schedules, the Eagan, Minn.-based candy maker typically turns to time-critical transportation, calling in a specialist like Roadway Express to make the delivery. That may be a costly way to move merchandise, but the candy maker can justify the extra expense in light of Target's high penalties for non-performance. "Last Christmas season, Target's charges for an early or late shipment went from 3 to 9 percent of invoice dollars," reports Tim Smiley, American Speciality Confections' shipping and receiving supervisor.

American Speciality's situation is hardly unusual. As cost-conscious companies have trimmed inventories, time-critical shipping—defined as on-demand pickup and delivery of freight (other than parcels)—has remained a hot offering for carriers. "This phenomenon has been coming on in the last couple of years," says Bill Michael, vice president at Roadway Express, which is based in Akron, Ohio. "[Using expedited] transportation is cheaper than holding inventory. That's what's driven the growth in time-critical transportation over the past year."

Hardly a new phenomenon, time-critical transportation traces its roots back to the mid-'90s, when Roberts Express (now FedEx Custom Critical) launched a service for emergency shipments. Shippers were willing to pay premium rates for trucks that showed up at their door in response to a specific request and guaranteed rapid transit.

Other carriers soon rushed into this marketplace. As a result, most of the big less-than-truckload (LTL) and truckload motor carriers now offer a time-critical service. In some cases, the ground carriers have even sprouted wings, subcontracting with airlines or hiring charter aircraft to fly a load to its destination.

Today, time-critical shipping has become an integral part of what's known as the expedited market, the catchall term for services designed to provide quick, reliable transportation with specified delivery dates. Under most arrangements, the shipper buys a guarantee for delivery within a set time period and the carrier determines whether to fly the freight or drive it to its destination. The expedited market also includes time-definite premium truckload and less-than-truckload services, which guarantee delivery overnight or in one, two or three days, depending on the customer's need.

Although time-critical makes up a small percentage of the overall expedited transportation market (which is projected to reach 6.78 billion shipments in 2002), it's becoming an increasingly important part of that business, according to Ted Scherck, president of the Atlanta-based market research firm The Colography Group. Scherck adds that the overall expedited market was down in 2001 because of the economy, but the time-critical segment was not as far off as the others were.

Carriers contacted for this article tended to agree with Scherck, but they noted that business had started to pick up a bit in the first half of this year. Sean O'Neil, director of expedited sales for Averitt Express in Cookeville, Tenn., says time-critical shipments have increased "a little bit" more than time-definite ones. "A hot-shot (time-critical) move is cheaper than air freight," O'Neil explains. "Depending on the geography involved for a freight movement, you're not talking a vast difference in service [between air and time-critical]. The time-critical or hot-shot service has been a good model. Shippers have been using that on a growing basis because [they] like the comfort level and reliability. They're willing to pay more for that assurance."

Edward Moritz, director of marketing for Con-Way Transportation Services in Ann Arbor, Mich., reports that his company's time-critical unit, Con-Way Now, has seen an upswing in shipper demand this past March for both its LTL and expedited offerings. "A lot of folks are squeezing inventory," he notes, "so they want vendors to deliver more rapidly than in the past."

UPS SonicAir, a Scottsdale, Ariz.-based carrier that specializes in time-critical shipments, has also seen an uptick. David Adams, director of global marketing for UPS SonicAir, says that many customers who curtailed use of its services late last year have resumed doing business with the carrier. "We've seen customers who weren't shipping with us after Sept. 11 starting to come back," he says.

Yellow Transportation Inc. reports that its time-critical product has done very well this past year. "Enhancements of the services and supporting technology have allowed for a growth rate in excess of 20 percent [for time critical]," says Mike Smid, executive vice president for the Overland Park, Kan.-based LTL carrier.

Roadway's Michael also notes that shipper demand for time-critical service picked up this summer. "Time critical has come on pretty strong in June and July," he says. "That leads me to believe that people are waiting until the last minute to ship."

Even in a sputtering economy, the shift toward more frequent, rush orders has benefited the providers of time-critical shipping services. In fact, most observers see a larger trend at work in the United States: Shippers that formerly made heavy use of airfreight service have shifted their business toward time-critical ground shipping, while shippers that traditionally used time-critical services are pursuing premium expedited services. "As we move further into economic downturn" says Scherck, "we're seeing a migration to time-definite but lower-cost distribution."

The trend has been driven by pressure to cut distribution costs. Faced with conflicting demands for faster service at lower prices, shippers forsook expensive air shipments and opted for time-critical ground movements. "The economy was a factor in making people explore the various alternatives in expedited transportation," confirms Satish Jindel, president of SJ Consulting Group Inc. in Pittsburgh.

Although the push to control costs and inventories has driven the growth of time-critical transportation to date, many believe that the concept of custodial control could play a large role in driving the market in the future. In the wake of the Sept. 11 terrorist attacks on the United States, some shippers with security concerns have expressed interest in having one carrier control a shipment's entire movement from pickup to delivery. "We've seen a heightened interest in security," reports Joel Childs, vice president of marketing for FedEx Custom Critical. "We've gotten some customers because of it, but we haven't had a surge in business."

Yellow's Smid reports that his company has seen an increase in its time-critical business in part because shippers want custodial control. "Prior to Sept. 11, we had already seen an increased demand for time-critical services," Smid says. "During the 30 days after the attacks, we saw a rise in demand, particularly in industries [with stringent] security demands."

But not everyone sees it that way. Scherck, for one, doesn't believe that security concerns will lead shippers to shift more business to the time-critical segment. "What difference does it make whether it moves in standard truckload or [time] critical? If you're buying a whole truckload, you're still going to load the trailer and put your seal on it, and you're still going to be responsible. I don't see [time] critical growing as a result of an increased emphasis on security."

For his part, Scherck predicts that the fortunes of time-critical transportation providers will rise or fall with the rest of the expedited market. "As a percentage of the total expedited marketplace, the number of emergency shipments that require [time]-critical transportation is stable," he opines. "If the expedited market grows with the overall economy, [time] critical will grow."