XPO Logistics further strengthens last-mile offerings with acquisition of Optima Service Solutions

Non asset-based 3PL XPO Logistics said today it has brought Atlanta-based Optima Service Solutions LLC into the fold for $26.6 million.

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In its most recent acquisition, non asset-based 3PL XPO Logistics said today it has brought Atlanta-based Optima Service Solutions LLC into the fold.

XPO said it purchased the non-asset provider of last-mile logistics for $26.6 million. And it added that Optima had revenue of $35.7 million and adjusted EBITDA of $3.7 million, respectively, for the trailing 12 months ended October 31, 2013. The acquisition is expected to be immediately accretive to earnings, exclusive of any synergies with the company’s existing freight brokerage business.

“Optima is a fast-growing, highly scalable leader in its space, and expands the capabilities of our last-mile division, 3PD,” XPO Chairman and CEO Brad Jacobs said in a statement. “It enhances our ability to provide a seamless in-home delivery experience for end customers, particularly with large appliances and electronics. In addition, Optima benefits from the same powerful tailwind as 3PD: the growing inclination of retailers and manufacturers to outsource the last-mile logistics of heavy goods. We plan to leverage these synergies, and integrate Optima’s proprietary software with our last-mile technology. This will create a single, powerful customer service platform that doesn’t exist in the last-mile sector today.”

In a recent interview with LM, Jacobs hinted this deal was coming, explaining that XPO was actively bidding on last-mile business in appliances, furniture, electronics, and building materials. Jacobs also said that XPO was talking to a large potential customer that is a major electronics manufacturer that is expanding and growing fulfillment centers and needs last-mile services.

Optima was established in 1997, and XPO said it generated a 16 percent compound annual growth rate over the last five years. Optima’s business leverages a contractual network of independent carriers and technicians that facilitate the residential delivery of heavy goods throughout the U.S. in every zip code, coupled with its proprietary technology that tracks last-mile processes through order entry, scheduling and service completion.

Last-mile delivery is a market segment XPO is keen on, and with its previous acquisition of 3PD, the largest non-asset, third party provider of heavy goods, last-mile logistics in North America, which was completed in August, and this week’s Optima acquisition, it is apparent that it will only continue to expand its last-mile presence.

Prior to the completion of the 3PD deal in July, Jacobs said that non-asset 3PLs matching shippers with carriers to get freight moved like XPO does is a major milestone in the company’s strategy and accelerates its growth rate and is a strong strategic fit.”

In XPO’s base business, Jacobs said XPO moves a lot of freight from factories and retailers to distribution centers and stores, with 3PD picking up where XPO leaves off.

This is where he said the last-mile service comes into play, with companies like 3PD and Optima moving freight from distribution centers to stores and into homes, businesses, and job sites through the final mile to the end user.

In an interview with LM, XPO Chief Strategy Officer Scott Malat said that Optima will be integrated into XPO’s 3PD business line.

“There are a lot of synergies between Optima and 3PD,” he said. “We are already the largest player in the heavy-goods, last-mile segment, but now we will combine our networks and are now able to tap into a larger carrier base and thousands of specialized technicians, which makes us more attractive to shippers.

Malat added that XPO’s heavy-goods, last-mile network is comprised of 3PD’s 700 carrier base representing 2,000 trucks, and Optima’s 250 carriers.

By combining these networks and tapping into a larger carrier base, XPO customers will have increased access to available capacity, said Malat, coupled with more specialized technicians. And from a technology standpoint, XPO can better match customer needs for these technicians with Optima’s proprietary technology that Malat said is meshed with XPO’s customer experience management software at 3PD.

“We are putting together a powerful customer service platform that does not exist in last-mile today,” he said.

Stifel Nicolaus analyst John Larkin wrote in a research note that XPO management estimates that Optima was in the top 30 last-mile logistics providers, and that several other similar sized and slightly larger players make up the U.S. last-mile market, but he noted that some of those have an agent model that would be slightly less attractive (unless converted upon acquisition).

 


About the Author

Jeff Berman, Group News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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