Last-mile logistics company USPack continued its mostly under-the-radar consolidation of its segment by acquiring Toledo, Ohio-based Freight Rite, a regional business-to-consumer (B2C) delivery provider.
At the same time, New York-based USPack acquired Gumro & Associates, a nationwide provider of pool distribution and store replenishment solutions. Gumro is based in the Detroit suburb of Auburn Hills, Michigan.
Terms of neither transaction were disclosed.
The Freight Rite acquisition will push privately held USPack deeper into the appliance, furniture, sporting equipment and electronics verticals. It is the company’s ninth acquisition over the past five years, according to Mergr, an M&A website. When it acquired specialty same-day delivery provider Fleetgistics in November 2018, USPack reported that it had quadrupled in size over the previous five years. The company provides same-day and next-day deliveries in the Northeast, Mid-Atlantic, Midwest and Pacific Northwest.
The last-mile delivery segment is as local and fragmented as they come, with the landscape jampacked with smaller, often mom-and-pop providers. Most of these companies are unknown to the wider world. However, many are recognized by their customers and other providers as offering reliable and high-quality services within their geographic and product niches.
USPack’s strategy involves snapping up the cream of the local last-mile crop to deepen its last-mile presence in the markets it buys into. It is a model that no one has really mimicked, at least to USPack’s degree.
Benjamin Gordon, who runs logistics M&A firm BG Strategic Advisors, is familiar with USPack’s approach and says it is the shape of things to come in last-mile logistics. “The last-mile logistics arena is on fire. It continues to grow in importance due to the surge in work-from-home and e-commerce,” he said. “USPack is buying last-mile companies in a bid to consolidate the sector. Other smart last-mile companies are likely to follow suit.”
The Gumro acquisition is designed to position USPack in the hardly new but growing area of pool distribution. Under the model, freight is consolidated at an origin point and shipped to a central pooling terminal supporting a retailer’s store network in a specific geographic area. The shipments are then distributed to the individual stores by local carriers.
Pool distribution is similar to a less-than-truckload (LTL) service in that users buy the trailer space their freight requires. However, because fewer trucks are typically needed to execute the service, pool distribution is considered a more efficient use of transport assets and can better support frequent deliveries of time-sensitive inventory. This ensures that retailers can replenish quickly and efficiently from an outside location without the need to hold buffer inventory at the store level.
Pool distribution is especially popular with specialty retailers that have a lot of stores but not much space inside them to store their products.
USPack is owned by NewSpring Holdings, which provides investment management, private equity and advisory services in the mid-market segment. The acquisitions were disclosed in late August.