J.B. Hunt Transport Services is snapping up another home-delivery firm as trucking companies compete to bring furniture, appliances and other bulky goods to consumers’ doorsteps, reports The Wall Street Journal (Jan. 9, 2019). The deal to buy Cory 1st Choice Home Delivery for $100 million deepens Hunt’s reach in a sector that has grown as shoppers get more comfortable shopping online for sofas, exercise equipment and other big objects that are too large for conventional parcel networks.
Hunt will gain 14 additional warehouses and access to a delivery network of more than 1,000 independent contractors, carriers and company drivers. As a result, the Arkansas carrier’s final-mile division will grow to 100 locations and more than 3.1 million square feet of warehouse and facilities space. “We have high expectations that there will be a lot of demand for that heavy goods delivery,” says Hunt’s CEO. “That’s the two guys in a truck, appliances, furniture, things that the parcel guys don’t want to handle.”
Last year, UPS raised its fees for the largest items it delivers to $650 to discourage shippers from sending oversize items such as refrigerators through its parcel system. FedEx also has added surcharges for oversize shipments. The big-and-bulky delivery business also poses challenges for trucking fleets, whose main revenue typically comes from hauling goods to commercial loading docks. Furniture and appliance delivery often involves special services, such as assembly inside shoppers’ homes.
The growth of e-commerce has raised customer expectations. Delivery windows are shrinking, and shoppers want to be able to track the arrival of a new washing machine the same way they might other online orders. Last year, XPO Logistics, the largest provider of last-mile delivery for bulky goods in North America, rolled out services allowing consumers to track their shipments through Google Search or smart speakers such as Amazon’s Alexa.
Classroom discussion questions:
- How does this differ from Amazon’s “last mile”?
- What are the OM issues that Hunt faces?