JB Hunt builds 'big and bulky' last-mile capacity with acquisition

Dive Brief:

J.B. Hunt acquired "big and bulky" last-mile provider RDI Last Mile Co. Dec. 31, for an undisclosed sum, the 3PL announced in a press release Thursday.
RDI specializes in large-format, last-mile deliveries on the East Coast, executed through a network of contractors. The carrier generates roughly $35 million in revenue annually.
The acquisition will further grow J.B. Hunt's prowess in furniture delivery, John Roberts, president and CEO of J.B. Hunt, said in a statement. The company's Final Mile Services division now includes 104 locations and 3.2 million square feet of warehouse space.

Dive Insight:

The RDI acquisition marks the third similar deal in three years including Cory 1st Choice Home Delivery and the Special Logistics Dedicated, acquired in 2017.

This time last year, J.B. Hunt acquired New Jersey-based last-mile delivery provider Cory for $100 million. In October, Roberts said the company had expanded its last-mile capacity 40% year-to-date and expects more than 10% growth per year for at least the next two years. "We will be breaking out this channel in 2020," said Roberts.

Furniture sales could reach 13.7% of all U.S. online spending, according to Statista. The growth of furniture e-commerce is spurring investments from carriers and retailers in oversized delivery, demonstrating the trend has not slowed in the three years since J.B. Hunt started buying.

Oversized delivery is a battleground several players are ready to defend. FedEx Freight Direct, the carrier's large-format home delivery service, moved beyond the pilot phase in October. The company intends to cover 80% of the contiguous U.S. with the service.

Though FedEx is building capacity for bulky home delivery on the freight side, the carrier and its competitors are drawing a firmer line between regular parcel deliveries and large-format in parcel operations, with new rates announced in 2019, which went into effect Jan. 1. Both added fees to parcels weighing more than 50 pounds.

In addition to FedEx and J.B. Hunt, Ryder, XPO, Amazon and Wayfair are investing in large-format delivery capacity.

But growing demand doesn't mean this is a space without challenges. Schneider shut down its last-mile program in August after nearly $30 million in losses.

"While we made significant investments in the operation, the business operating results are below target, not meeting our expectation on financial performance, or improving at an acceptable pace or timeline," Schneider CEO Mark Rourke said on an earnings call.

Wayfair, too, has proven the high cost to deliver furniture, as continued losses reveal the importance of tightly tying capacity and demand.