Hub brings Forward Air Final Mile into the fold, expands final-mile service portfolio

Late yesterday, Oak Brook, Ill.-based freight transportation and logistics services provider Hub Group took steps to expand its final mile service portfolio, announcing it has acquired Forward Air Final Mile (FAFM), a subsidiary of Greenville, Tenn.-based asset-light freight and logistics services provider Forward Air.

The purchase price was $262 million, according to Hub Group officials, with the acquisition funded with cash on hand. Hub added that for the last 12 months ended September 30, 2023, FAFM revenues came in at $289 million.

FAFM’s key service offerings are centered on residential final mile delivery and installation of big and bulky goods, focused on appliances. FAFM has United States delivery coverage through its network of independent service providers and 46 company-operated facilities. What’s more, in recent years, Forward Air made multiple acquisitions to build out its final-mile service offerings, including: a May 2019 acquisition of FSA Logistics; and a September 2020 acquisition of CLW Delivery Inc.

“We are excited to welcome the FAFM team, customers and independent service providers into the Hub Group family” said Phil Yeager, Hub Group’s CEO, in a statement. “This acquisition aligns with our long-term investment strategy and enables our goal of providing the premier supply chain solution. Our cultural alignment with FAFM, increased scale and complementary offerings will lead to enhanced value for our customers and long-term growth for our team.”

And FAFM Senior Vice President Scott Robider said that FAFM is excited to become part of the Hub Group, adding that FAFM and Hub Group share similar values and goals in striving to be the logistics provider of choice through reliability, integrity, and innovation.

“We believe Hub Group’s middle-mile and final-mile expertise, combined with our unique appliance delivery capabilities, will unlock significant value for our combined customers and through this combination we expect to accelerate our growth versus what we have each done individually in the past,” he said.

Going forward, Hub Group said that the company has granted contingent compensation to FAFM senior management “to incentivize their retention and drive continued growth in Hub Group’s Final Mile service offering,” with the combined businesses to operate under the Hub Group Final Mile brand.

A Hub Group spokesman told LM that Hub Group’s vision is to be the premier provider of supply chain solutions, noting that to achieve this vision, it is constantly looking for ways to expand both organically and through acquisition.

“Forward Air Final Mile has grown into one of the most sophisticated white glove delivery, assembly, and installation companies nationwide, with a heavy focus on appliances,” he said. “Their award-winning team of experts are equipped with the experience and skills to deliver industry leading service to our consumers. Their offering complements Hub Group’s existing Final Mile business and allows us to expand our footprint and expertise into the appliance industry—enabling us to further serve our customer’s supply chain needs. We will be combining both organizations to create a $500M Final Mile business to deliver our customers with the best of cost and service. We are happy to welcome Forward Air Final Mile’s leadership team and its 650 employees to the organization. We share a common culture and relentless focus on providing the highest service levels in the industry.”

Robert W. Baird & Co. analyst Garrett Holland wrote in a research note that strategically, FAFM more than doubles HUBG’s final mile business from revenue of around $192M to around $481M and increases the concentration of Hub’s logistics revenue to roughly 44% of total sales compared to a previous tally of 41% of total sales.

“Hub Group becomes the fourth-largest final mile operator in the $15B addressable U.S. market,” he wrote. “The expanded final mile network improves density and adds complementary appliance delivery/installation, which should drive cross-selling opportunities.”