It looks like Hub Group has made a significant move by acquiring Forward Air Final Mile (FAFM), aiming to expand its final-mile service portfolio in the logistics industry. The acquisition, valued at $262 million, has brought in FAFM’s expertise in residential final mile delivery and installation of big and bulky goods, particularly appliances.
This strategic acquisition has not only added to Hub Group’s revenue stream but also increased its market presence. By integrating FAFM into its operations, Hub Group anticipates enhancing its services, leveraging FAFM’s established network of independent service providers and 46 company-operated facilities across the United States.
The consolidation aligns with Hub Group’s long-term investment strategy to offer top-tier supply chain solutions. The company aims to leverage the cultural alignment, increased scale, and complementary offerings from FAFM to provide enhanced value to customers and drive long-term growth.
The decision to grant contingent compensation to FAFM senior management reflects Hub Group’s intention to retain talent and sustain growth in its Final Mile service offering. Moreover, the combined businesses will operate under the Hub Group Final Mile brand, aiming to create a robust $500 million Final Mile business.
Analysts see this acquisition as a substantial strategic move for Hub Group, more than doubling its final mile business revenue and increasing the concentration of logistics revenue in its overall sales. This positions Hub Group as the fourth-largest final mile operator in the U.S. market, providing better network density and cross-selling opportunities, particularly in appliance delivery and installation.
Overall, it seems like a well-thought-out strategic move by Hub Group, poised to capitalize on the strengths and expertise of FAFM to strengthen its market position and offer more comprehensive supply chain solutions.