newsworthy
XPO Logistics buys 3PD
XPO Logistics Inc., a transportation broker, freight forwarder, and expedited transportation company, has
acquired 3PD Inc., the largest nonasset-based service
provider in the fast-growing segment of “last-mile” logistics. These providers typically deliver heavier goods such
as appliances and desks from DCs and stores to residences,
businesses, and job sites.
XPO, based in Greenwich, Conn., will pay $359 million
in cash and $8 million in restricted stock for Marietta,
Ga.-based 3PD. The transaction is expected to close in the
third quarter. It is XPO’s largest acquisition since its
launch in 2011.
3PD, which acts as an intermediary between manufacturers, retailers, and end customers, manages twice as
many last-mile deliveries a year as its nearest competitor,
according to XPO. It relies on a large network of local and
regional delivery firms, who handle deliveries ranging in
distance from one mile to 150 miles. 3PD handles deliveries for large customers under dedicated contract carriage
and will also manage one-off deliveries not under contract.
3PD, which is privately held, generated $319 million in
revenue in the 12-month period ending May 31. Through
May, its earnings before interest, taxes, depreciation, and
amortization (EBITDA) were up 36 percent from the
year-earlier period.
All of 3PD’s executives will join XPO after the transaction, XPO said. 3PD was founded in 2001 by brothers Karl
and Randy Meyer. Karl Meyer, who is chairman and CEO,
had served as corporate delivery manager for mega-retail-er Home Depot Inc. The Meyers (Randy is 3PD’s CFO)
started the company because they felt they could do a better job providing last-mile deliveries than either large
shippers or big retailers.
BIG BUSINESS
XPO estimated that shippers spend about $12 billion a
year on last-mile deliveries of goods generally weighing
more than 150 pounds. Manufacturers and retailers
increasingly outsource the function because it falls outside
their core competency and can be executed more cost-effectively by a specialist. The outsourcing trend is expected to accelerate as the growth of digital ordering results in
accelerating volumes.
Last-mile delivery is one of the few areas of transportation that has not become price commoditized,
mainly because of the premium placed on the speed and
precision of the delivery. It is also a high-margin, high-barrier-to-entry business that 3PD has come to dominate because of its large-scale investments in technology
that, among other things, provides up-to-the-minute
shipment status information and allows 3PD to winnow
out delivery firms that don’t meet its service standards.
Not surprisingly, truckers and third-party logistics companies are entering the field, attracted by the high margins and the ability to add another arrow to their service
quiver.
Bradley S. Jacobs, XPO’s chairman and chief executive
officer, said the acquisition is an excellent strategic fit
because XPO generally brokers shipments that move from
the factory to either the warehouse or DC. “Our destination is their origin,” he said in a phone interview.
XPO expects 2013 revenue to exceed $1 billion as it
builds its business through acquisitions and organic
growth. Most of its revenue comes from the truck brokerage segment, a $50 billion-a-year business that is highly
fragmented. ;
—M.S.
accolades
The Whitman School of Management at Syracuse
University will present the Salzberg Medallion to Earl E.
Congdon, executive chairman of the board of Old
Dominion Freight Line Inc., and to Kuehne + Nagel Inc. The
Salzberg Medallion recognizes individuals and companies
that demonstrate excellence in transportation and supply
chain management. … Jacksonville, Fla.-based Crowley
Maritime Corp. has been recognized as one of the top
three 2013 Healthiest Employers by the Jacksonville
Business Journal. Crowley ranked third of all large
Northeast Florida companies (500-plus employees). … The
American Trucking Associations’ (ATA) Supply Chain
Security & Loss Prevention Council has presented Old
Dominion with the ATA Excellence in Security Award as
well as the Excellence in Claims & Loss Prevention Award.
… Intelligrated, a North America-based automated material handling solutions provider, has been recognized as a
top workplace in the greater Cincinnati and Northern
Kentucky area by the Cincinnati Enquirer. … Murphy
Warehouse Co., a Minneapolis-based logistics company,
has received the 2013 Family Business of the Year Award.
… Ruan Transportation Management Systems and
Chairman John Ruan III have been honored with the
Employer Support of the Guard and Reserve’s (ESGR’s)
Patriot Award. The Patriot Award honors supervisors for
their superior support of Guard and Reserve employees.
