XPO Logistics is set to acquire 3PD

The acquisition train continues to keep rolling along for non asset-based 3PL XPO Logistics, with the most recent stop being today’s announcement that it plans to acquire 3PD Inc., the largest non-asset, third party provider of heavy goods, last-mile logistics in North America.

By ·

The acquisition train continues to keep rolling along for non asset-based 3PL XPO Logistics, with the most recent stop being today’s announcement that it plans to acquire 3PD Inc., the largest non-asset, third party provider of heavy goods, last-mile logistics in North America.

XPO said it has entered into a definitive agreement to acquire all of the common stock 3PD for roughly $365 million, with the sale price comprised of $357 million in cash and $8 million in restricted XPO stock. The deal is expected to be made official by the end of the third quarter.

This transaction represents the largest financial outlay made by XPO since its Chairman and CEO Brad Jacobs and his firm Jacobs Private Equity LLC and a group of investors made a $150 million commitment into Express-1 Expedited Solutions, a non-asset-based third party logistics transportation provider, and subsequently re-named the company XPO Logistics, in mid-2011.

Based in Marietta, Ga., 3PD serves retail shippers through its last-mile delivery services provided by the 900 carriers it has established relationships with. The company was established in 2001. XPO said that it facilitates roughly more than double the amount of deliveries as its closest competitor by matching up small- and mid-sized shippers to carriers on a transactional basis, coupled with a $17 million investment into developing its proprietary technology, which focuses on customer satisfaction metrics, and process management services, in order to provide more miles to carriers with higher customer satisfaction ratings.

“3PD is the largest provider of heavy goods, last-mile logistics in North America,” said Jacobs. “They are a non-asset 3PL like we are and matching shippers with carriers to get freight moved just like XPO does. It is a major milestone in our strategy and accelerates our 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 3PD moving freight from distribution centers to stores and into homes, businesses, and job sites through the final mile to the end user

“Having this full supply chain capability from cradle to grave differentiates us to large retailers from our competitors,” said Jacobs. “Like XPO, 3PD does not own any trucks, so we can get a higher return on capital by utilizing relationships with a network of carriers and so does 3PD through its 900 carrier relationships. And they facilitate 4.5 million deliveries per year. They are the clear leader in their space and are hungry for more growth. It is a company with tremendous momentum.”

The last-mile delivery market with 3PD is highly active in is a $12 billion annual market, according to Jacobs. And he said about $3.5 billion of that is outsourced to 3PLs, with that outsourcing figure rising due to increased e-commerce activity.

What’s more, he said that 3PD has about 13 percent market share in this business, with Exel its next closest competitor at about 8 percent and J.B. Hunt and CEVA Logistics each at about 5 percent, respectively.

3PD’s management team, led by CEO Karl Meyer and CFO Randy Meyer, and the company’s entire management team has agreed to join XPO and continue to lead 3PD company operations. 

“They have put together a team that has decades of experience in last-mile logistics,” said Jacobs. “And they are looking forward to growing fast with XPO.”

Prior to making this deal, Jacobs said XPO provided last-mile delivery services through partnering with 3PLs and 3PD.

Slightly past the mid-year point of 2013, Jacobs said XPO is currently at a revenue run rate north of $500 million, with a goal to be EBITDA-positive by the fourth quarter and a revenue run rate of about $1 billion.

“We have a bunch of acquisitions in the pipeline and [after the 3PD deal] will be challenged to do any of the large ones now, but we still have a bunch of small ones that are moving along and are highly scalable that we are actively looking at,” said Jacobs.

 


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

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

3PL · XPO Logistics · All Topics
Latest Whitepaper
Six Ways Cloud ERP Supports Rapid Innovation
Kenandy is a new approach to ERP that lets you and your team focus on driving innovation, creating new product lines, and expanding your customer base even as you improve your business operations.
Download Today!
From the November 2016 Issue
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL) provider that could successfully combine transportation services and technology capabilities under one roof.
Warehouse & DC Operations Survey: Ready to confront complexity
2016 Quest for Quality Awards Dinner
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Best Practices: How to Efficiently Leverage APIs to Increase Your Net Income
Both legacy and modern technology leaders agree that leveraging API connectivity is critical in keeping up with the pace of a world that demands not only speed and agility, but also a deep level of visibility. During this session a panel of technology and industry experts discuss impact APIs can have on annual net income and market capitalization.
Register Today!
EDITORS' PICKS
Logistics Management’s Top Logistics News Stories 2016
From mergers and acquisitions to regulation changes, Logistics Management has compiled the most...
Making the TMS Decision: Ariens Finds Just the Right Fit
The third time is the charm for this U.S. manufacturer on the hunt for a third-party logistics (3PL)...

Motor Carrier Regulations Update: Caught in a Trap
The fed is hitting truckers with a barrage of costly regulations in an era of scant profits....
25th Annual Masters of Logistics
Indecision revolving around three complex supply chain elements—transportation, technology and...