J.B. Hunt Transport Services Inc. has added another "final mile" business that handles home delivery of big and bulky online orders.
RDI Last Mile Co., a trucking company in Massachusetts, agreed last year to sell its assets to J.B. Hunt Transport Inc. for an undisclosed amount.
Founded in 1986, RDI built a contracting business that delivers mainly furniture and other oversize items to homes along the eastern U.S. Over the years it became a business with annual revenue of $35 million. J.B. Hunt said the acquisition was final on Tuesday.
As online shopping continues growing in popularity, the last leg of the delivery process -- when the product travels from the warehouse to the buyer's doorstep -- is the biggest challenge and expense for retailers and logistics companies. It's also a high growth opportunity for the North American market. According to Technavio, a research firm in London, last-mile delivery is expected to grow by $44.9 billion in the next four years, with most of it coming in the United States.
Recently, J.B. Hunt and others have fine-tuned their last-mile delivery networks to carve out more space in a fragmented market dominated by UPS, FedEx, the U.S. Postal Service and retail giant Amazon. At the rate Amazon Logistics is going, it will be delivering more packages total than either UPS or FedEx by 2022, Morgan Stanley analysts have estimated. The benefits lie in owning the entire delivery chain from the warehouses to the customers' doors.
"Growing our final mile delivery capabilities is a priority, and the acquisition of RDI further extends our expertise in furniture delivery," John Roberts, J.B. Hunt's president and chief executive officer, said in a statement.
RDI is J.B. Hunt's third last-mile acquisition in three years. J.B. Hunt bought Cory 1st Home Delivery in 2o19 and Special Logistics Dedicated in 2017. With RDI, J.B. Hunt's Final Mile Services will expand to have more than 104 locations and 3.2 million square feet of warehouse and facilities space, the company said Thursday.
Justin Long, a Stephens Inc. analyst who covers transportation, said RDI is more of a strategic move for J.B. Hunt, complementing previously made acquisitions.
"It's such a small piece of what they do today," Long said, alluding to the company's freight and intermodal services. "It's not what investors are primarily focused on."
It is what transportation and logistics companies are focused on. Technavio reported a 12.7% annual growth rate for the 2020 market, banking on online shopping growth to drive demand for last-mile delivery for years to come.
Business on 01/03/2020