Schneider shuts down First to Final Mile delivery due to 'poor operating performance'

Dive Brief:

Schneider National is shuttering its First to Final Mile (FTFM) service "due to the poor operating performance," the company announced in filings with the Securities and Exchange Commission with its most recent quarterly earnings report.
The FTFM service handles deliveries of home goods and bulky items. The shutdown is expected to be completed by Dec. 31, 2019.
"This decision followed a careful assessment of the near and longer-term prospects and alternatives," company CEO Mark Rourke said in a statement. "We believe this course of action allows us to fully focus on our services within Truckload, Intermodal, and Logistics, is consistent with our portfolio management and capital allocation disciplines, and is in the long-term best interest of our Company and our stakeholders."

Dive Insight:

Large last-mile deliveries, also known as big and bulky, have become more prominent in recent years as large items like furniture and appliances are sold online and need to be delivered to customers' homes.

Bulky delivery services have been an area of interest for multiple transportation providers because of this growth. In 2016, Schneider acquired two last-mile companies to support furniture and oversized goods deliveries, according to the Wall Street Journal. Earlier this year, J.B. Hunt acquired Cory 1st Choice Home Delivery for $100 million to get into this line of business.

It's also something retailers are having to consider with Amazon opening up a warehouse in 2017 to specialize in these large items.

But these signs of a strong market weren't enough for Schneider, which will lay off 85 workers as a result of closing the FTFM program, according to the Green Bay Press Gazette.

The FTFM program resulted in large losses for Schneider: $13 million in the first quarter, $13.4 million in the second quarter and an estimated $9 million in the third quarter, CFO Steve Bruffett said on the company's earning's call.

"While we made significant investments in the operation, the business operating results are below target, not meeting our expectation on financial performance, or improving at an acceptable pace or timeline," Rourke said on the call.