J.B. Hunt Transport Services Inc. will buy a Houston-based logistics company for $136 million, according to a press release.
The company, Special Logistics Dedicated, has assets that J.B. Hunt says will allow it to enhance its final-mile delivery capabilities. Final-mile delivery has come under the microscope as consumers today expect their goods to be at their doors in a shorter time span, within a day or two.
Online purchases from retail companies like Amazon.com Inc. are credited for influencing these kinds of moves. Amazon sent shock waves through the retail space last month when it announced its purchase of Whole Foods Market Inc., a traditionally brick-and-mortar store. Most recently, Sears Holdings Corp. announced it will begin selling some of its Kenmore appliances through Amazon.
"I think we are seeing a pretty strong trend in retail where the growth is with e-commerce," Stephens research analyst Brad Delco said. "The challenge with an e-commerce supply chain is having density in the final mile. That's the most expensive segment of transportation."
The growth in fulfillment centers nationwide is another factor. In Special Logistics, J.B. Hunt will gain about 14 fulfillment centers, which are needed in a shipper's supply chain to reduce the time it takes to deliver goods.
"This acquisition will also allow our customers to deploy 'big and bulky' inventories into key markets, improving order fulfillment times for final mile deliveries and further enhancing our e-commerce delivery capabilities," J.B. Hunt Chief Executive Officer and President John Roberts said in the news release.
Calls to Special Logistics Dedicated were not returned.
The company will join under J.B. Hunt's dedicated contract services segment, the part of the business that companies can contract to be their shippers, according to a spokesman.
In J.B. Hunt's most recent earnings report, released earlier this week, the company's dedicated segment accounted for about 24 percent of its revenue and 30 percent of its quarterly profit. Delco said these numbers were in line with his firm's expectations.
Delco said he has watched J.B. Hunt's dedicated segment grow over the past five years, and noted Friday that investors and consumers should expect this trend to continue. He said the goal of J.B. Hunt with dedicated is to become embedded with its clients' business and essentially become their private fleet.
Business on 07/22/2017