J.B. Hunt goes the ‘Final Mile’

Widely known for its long haul and massive intermodal businesses, J.B. Hunt Transport is also making a name for itself in home delivery with its Final Mile service.

Through the company’s Dedicated Contract Services (DCS) division, J.B. Hunt collects bulky packages from online retail orders and delivers them the final mile from one of its 90-plus warehouse locations scattered across the country. The warehouse locations account for a total of more than 1 million square feet of space.

Nick Hobbs, president of DCS, said last week he saw a niche opportunity several years ago to take singular bulk items like treadmills, dishwashers and furniture and other large items that don’t fit on a pallet, the last mile in what could be a long logistics haul across country.  

As e-commerce orders grow, this segment of Hunt has continued to expand to fill a growing niche market. Less-than-truckload carriers do a great job helping retailers with smaller pallet orders, but they stop in the backroom or the distribution center, Hobbs said.

“FedEx does a great job delivering small packages to the front door but I didn’t see any major carrier taking large bulky items into the home and assembling or installing them for the manufacturer or retailer. So we started doing it,” Hobbs said during a retail supply chain conference at the University of Arkansas last week (April 11.)

This final mile segment is averaging 2 million deliveries a year, according to data on J.B. Hunt’s corporate website.

Hobbs said the warehouse network is positioned within 150 miles of the 98% of the U.S.population. Northwest Arkansas is serviced out of the Tulsa warehouse, he said.

The Final Mile service is helping to boost DCS segment revenue. In the first quarter of 2013, DCS revenue rose 9% from the year-ago period.

A net additional 633 revenue producing trucks were added over the same period 2012, primarily from new accounts. The company also expensed $1.7 million in contract implementation costs for new long-term customers. These costs include driver and management hiring costs, equipment repositioning costs, technology design and integration.

One niche J.B. Hunt has cornered is in-home delivery for one retailer with a very high-net-worth customer – average $600,000 annually, according to Hobbs. He said in-home delivery is more expensive for the company but customers are willing to pay a premium for services.

Hobbs said taking the J.B. Hunt brand to the consumer level comes with added costs and some challenges.

“We have two men in the truck, which is necessary for safety and physical lifting. These drivers go through stringent background checks and must have closely shaven beards and no visible tattoos. In some cases they wear the uniform of the customer we are delivering for as well. We have plumbers, and other skilled trade professionals helping with the installation and set-up when necessary,” Hobbs said.

Some of the largest brands on the planet using J.B. Hunt with their final mile delivery needs include Best Buy, Home Depot, Cargill, Whirlpool and Blue Seal.

“We haven’t done a lot of direct marketing of this service to the consumer, but we target high-end retailers who rely on help getting the product safely delivered and set up,” Hobbs said.

Jim Crowell, director of the UA Supply Chain Management Research Center, said J.B. Hunt is out in front with this Final Mile service, which is positioned to grow in the coming years as consumers do more online shopping direct from manufacturers.

Aside from retail/ manufacturers product delivery, Hobbs said they also haul doors, windows and other building supplies for Toll Brothers and other players in the residential construction arena.

DIRECT TO CONSUMER
Dr. Jim Tompkins, CEO of Tompkins International, said the lines between retailers and suppliers will become more blurred in the future as manufacturers begin to market their some of the product online.

Hobbs and other logistics professionals at the conference predict a time when a consumer might order their groceries online from multiple retailers/ suppliers and have them delivered in one consolidated package and put away in the pantry by a service like Final Mile.

Hobbs also told the group delivering quality customer service is a must when you are entering someone’s home. He said consumers want and expect quality service and will let people know when they don’t get it.

“We were recently reminded of that by The Southern Wife in her blog. Thankfully we made it right and she posted that too,” Hobbs said.

Consumers can order Final Mile delivery and installation from Amazon.com as an add-on service provided by J.B.Hunt.

Hobbs says during the first few months of the year they deliver lots of treadmills, and as spring blooms they deliver more grills and outdoor furniture making the business somewhat cyclical.