Schneider, which didn’t disclose terms of the deals, had not made an acquisition since 2005, although the Green Bay, Wisconsin-based carrier has built out its intermodal and bulk networks to complement truckload and related logistics services.
Watkins & Shepard, based in Helena, Montana, is headed by former American Trucking Associations Chairman Ray Kuntz. The company, founded in 1974, has 20 terminals and 1,300 drivers. Michigan-based Lodeso operates with nearly 600 agents.
The moves by the company that ranks No. 7 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, along with the Big G Express June 1 purchase of Ike Transportation, injected new activity into the industry’s merger and acquisition market. Schneider’s action also could be a sign of much stronger future carrier interest in the final-mile delivery of large products such as appliances and furniture, an analyst said.
Chief Operating Officer Mark Rourke told TT that Schneider’s moves represent an opportunity to capitalize on the rapid acceleration of e-commerce and omnichannel retailing by moving overdimensional high-value freight right to consumers.
“There is an unmet need for delivery of items like furniture, exercise equipment or gun cases that do not go well into the parcel guys’ networks,” Rourke said.
Both UPS Inc. and FedEx Corp. in recent months have announced their intention to surcharge or restrict those overdimensional shipments.
Watkins & Shepard is “the gold standard in the carpet and furniture segments,” Rourke said. The Helena-based carrier was listed at No. 27 among LTL carriers in the for-hire TT100, with revenue from that business of $162.1 million. The Montana carrier also offers truckload and logistics services. That LTL revenue would add about 4% to Schneider’s $3.9 billion total.
Rourke said the moves also offered the advantages of technology that is already in place, to link Watkins & Shepard and Lodeso. In addition, he said the acquisitions enabled Schneider to acquire a network that already has been built out, including facilities at major import centers and regional manufacturers to support e-commerce in the furniture sector.
“It makes a lot of sense that Schneider wants to be in that market. Final-mile is the part of the trucking landscape that almost no one of scale does,” said Jason Seidl, a Cowen & Co. analyst, saying that only No. 14 XPO Logistics and No. 3 J.B. Hunt Transport Services Inc. are in that market now. “You are seeing a much more focused and professional approach to heavyweight home delivery now. Think about it: When a consumer goes to order a refrigerator, who usually shows up? It’s two guys in an unmarked truck with dirty T-shirts.”
Seidl told TT that, given the fast growth of e-commerce, he expects there will be several more acquisitions of final-mile carriers over the next year to 18 months.
Kuntz, the Watkins & Shepard CEO, said his company has been working with Lodeso for about 10 years, and over the past 18 months, they have been offering customers a combined one-bill rate for shipping. He said the arrangement allows for delivery of rugs, furniture and other large goods to any home in America.
“We’re the first mile, and they’re the final mile,” said Kuntz, adding that 70% of his company’s revenue comes from LTL work and the 30% in truckload is usually for backhauls. Kuntz said e-commerce has been one of his main efforts for the past three or four years.
Kuntz, who turns 60 this year, also said he has committed to remain with the company for at least three years.
“Schneider is very excited about the creation of a world-class e-commerce provider. We open up the whole world of e-commerce logistics — or at least all of the lower 48 states,” Kuntz said.
“The ability to provide differentiated experiences for retailers, manufacturers and consumers is a primary area of strategic growth for Schneider,” said CEO Chris Lofgren. “We will continue to make significant investments to capture the full potential the combined companies now have to connect the first mile to the final mile.”
Associate News Editor Jonathan S. Reiskin contributed to this story.