Bradley S. Jacobs wants your washer-dryer. Your refrigerator.
Your plasma TV set. And whatever other big stuff you can’t live
without that has to be delivered and hooked up.
XPO Logistics Inc., the freight broker, forwarder, and expedited company that Jacobs founded and runs as chairman and
CEO, last month acquired Optima Service Solutions LLC, a
nonasset-based provider of last-mile logistics services, for $22.6
million in cash. Last-mile providers typically deliver heavier
goods from distribution centers and stores to residences, businesses, and job sites. A last-mile move could be as short as one mile or as long
as 150 miles, depending on the linehaul requirements.
Founded in 1997, Atlanta-based Optima operates through a nationwide
network of 225 contract carriers and a cluster of installers that focus on deliveries of electronics and appliances that require a high level of plumbing and
electrical expertise. Optima had revenue of $35.7 million for the 12-month
period ending Oct. 31.
The announcement comes four months to the day after Greenwich, Conn.-based XPO announced it had acquired 3PD, the leader in the U.S. last-mile
delivery market, for $367 million. Karl Meyer, 3PD’s former chairman and
CEO, runs XPO’s last-mile operation, which was folded into the company’s
brokerage division, its largest.
In a statement, Jacobs said the Optima acquisition would increase XPO’s
presence in the growing and high-margin last-mile delivery market. Shippers,
which spend about $12 billion a year on last-mile deliveries of heavy goods,
are increasingly outsourcing the function because it is outside their core competency. Meyer, in fact, was corporate delivery manager at retailer Home
Depot Inc. before he started 3PD in 2001 with the belief his new company
could handle deliveries more cost-effectively than his old company could.
Another reason Jacobs likes the last-mile delivery business is that it fits with
XPO’s core brokerage operations, which manage shipments moving from the
factory to either the warehouse or DC. “Our destination is their origin,” he
said in an interview the day the 3PD purchase was announced.
In a mid-October interview with John G. Larkin, lead transportation analyst for investment firm Stifel, Nicolaus & Co., XPO executives said the company is looking to double its annual last-mile revenues to about $625 million
by 2017. Most of its current revenue comes from 3PD. XPO executives believe
there are about 30 last-mile providers around Optima’s size that, in aggregate,
make up the bulk of the last-mile provider segment.
XPO has projected its total 2013 revenue will exceed $1 billion and expects
to reach $5 billion in revenue by 2017, according to Larkin’s summary of the
meeting. By the end of 2014, XPO expects to be the second-largest company
by revenue in the very fragmented $50 billion-a-year brokerage industry. The
longtime leader is C.H. Robinson Worldwide Inc., the Eden Prairie, Minn.-based concern with about $9 billion in annual revenue.
In an interview at the Council of Supply Chain Management Professionals’
Annual Global Conference in October, Jacobs said he was looking for additional acquisitions in the brokerage sector as well as in transportation management, an area where XPO is a minor player at this point. ;
—M.S.
go figure …
15%–25%
The increase in spot market rates on air charter
services from Shanghai to major U.S. airports
from Oct. 18 to Oct. 25. A spokeswoman for logistics firm UTi Worldwide said charter demand hasn’t been this strong since Microsoft Corp. introduced its first Xbox game console in 2001.
SOURCE: UTI WORLDWIDE
XPO expands last-mile delivery
presence with Optima purchase
Associated, a provider of integrated supply chain services, said it will
buy rival Peach State Integrated
Technologies Inc. for an undisclosed sum. Under the agreement,
announced last month, Peach State
will operate as a subsidiary of
Associated. The transaction is
expected to close in the first quarter of 2014.
Both companies offer supply
chain consulting, engineering, and
automated material handling solutions. Combined, they will form
one of the largest supply chain
solution providers in North
America.
The acquisition represents a
strategic move by Associated to
broaden its service offerings and
reach. “We have made the commit-
ment to transform from the mate-
rial handling company of the past
to the supply chain solution
provider of the future,” said
Michael Romano, president/CEO of
Associated, in a statement. “This
represents a significant step in that
direction.”
Peach State will continue to
operate under its name and brand
identity with the same leadership
and organizational structure,
including its current president,
James R. Bowes Jr. ;
Associated to acquire
Peach State
