Schneider National’s brief flirtation with last-mile home delivery has come to an end.
According to various news reports and reporting by Paul Page at the Wall Street Journal, the Green Bay, Wisconsin, carrier is getting out of the Last Mile home delivery market of appliances and other oversized goods. According to Schneider officials, the attempt to tap into a consumer market fueled by growing e-commerce demand simply hasn’t worked out.
Company officials said that by the end of the year it will wind down operations in the First to Final Mile, or FTFM, business that it launched with two acquisitions three years ago.
“This decision followed a careful assessment of the near and longer-term prospects and alternatives,” Mark Rourke, Schneider’s chief executive, said in a press statement.
Schneider was one of several large fleets to experiment with the growing last-mile market, which specializes in fast delivery of goods purchased online. As that trend has evolved, consumers have grown more comfortable ordering larger, more expensive items online as well, such as appliances, exercise equipment, and furniture.
Schneider National, one of the largest U.S. carriers in a truckload sector that serves retailers and manufacturers, jumped into the business in 2016 by buying two specialty providers, Lodeso and Watkins & Shepard Trucking, for undisclosed sums.
Home delivery has been a difficult proposition for cargo carriers. E-commerce expansion has pushed millions of new packages into parcel networks, but carriers have struggled with the high costs of the larger number of packages bound for residences. UPS and FedEx have been seeking to set up centralized pickup and drop-off locations to reduce the costs and complications of residential parcel delivery.
Logistics experts say home delivery is especially difficult for trucking companies that are more focused on industrial distribution.
Schneider said the shutdown would affect 26 terminals dedicated to the business and that it would try to place workers affected by the shutdown with other parts of the company.
The company disclosed the shutdown as it released second-quarter earnings that included a 48% decline in net profit, to $34.5 million, on declining revenue in its core truckload business.