Dive Brief:
- J.B. Hunt has acquired New Jersey-based last-mile delivery provider Cory 1st Choice Home Delivery for $100 million, according to an announcement from the 3PL.
- "This is a strategic investment that will further advance our final mile delivery capabilities of 'big and bulky' products to consumers and expand our expertise in furniture delivery," said John Roberts, president and CEO of J.B. Hunt in a statement.
- In the acquisition, J.B. Hunt gains 14 warehouses and more than 1,000 independent contractors, carriers and delivery drivers capable of completing more than 2 million annual deliveries.
Dive Insight:
The delivery of "big and bulky" items has been a battleground for both retailers and logistics providers in recent years as consumers become more comfortable ordering items like furniture and appliances online. In an October survey, XPO Logistics found 37% of U.S. consumers planned to purchase furniture, appliances or other goods weighing more than 150 pounds within the year.
Some retailers and 3PLs have been building capacity to meet the demand. In late 2017, Amazon opened a 1-million-square-foot warehouse in Livonia, Michigan, which specializes in shipping larger items such as household decor, sports equipment and garden tools within the Midwest.
Last year, Home Depot opened a new kind of fulfillment center in its network, called "market delivery operations" specifically intended to facilitate fast delivery of large and bulky items near large markets.
And Best Buy executives also remarked on an earnings call last fall that their new warehouse in Compton, California, was a better fit for such deliveries.
It's likely not just the money to be made in this growing segment of e-commerce that is driving the relevant players to invest in oversized delivery capability. The category is also problematic for many retailers and 3PLs because, according to a 2018 report from uShip, 21% of oversized purchases ordered in the previous year arrived damaged, and 15% of customers said the item never arrived at all.
Bringing in a specialist via acquisition as J.B. Hunt has done — only the company's second such transaction ever — is one way to potentially reduce damaged deliveries and the reverse logistics mess they create.
XPO as well has put stock in the bulky delivery category, but not all 3PLs are running toward oversized, heavy shipments. UPS' new surcharges, announced in December, increase the charge for packages weighing more than 150 pounds by $200, according to the Atlanta Business Chronicle.
