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Ryder’s last-mile business gets huge boost in acquisition of Whiplash

Whiplash will more than double company’s current last-mile revenue

Photo: Jim Allen/FreightWaves

Ryder System is growing its last-mile footprint substantially with the acquisition of Whiplash.

Whiplash will be added to Ryder’s last-mile capabilities that now sit in the company’s Supply Chain Solutions segment. Ryder, which announced the deal Monday, is paying $480 million to acquire Whiplash.

One barometer of just how much bigger Ryder’s last-mile capabilities will grow: Ryder said its last-mile operations post-Whiplash will give it the ability to reach 100% of the U.S. within two days and 60% within one day. In an email to FreightWaves, a Ryder spokeswoman said the current numbers are 95% and 33%, respectively.

“The acquisition of Whiplash is consistent with our strategy to accelerate growth in our higher-return supply chain business,” Ryder (NYSE: R) CEO Robert Sanchez said in announcing the deal. “It also expands our e-commerce and omnichannel fulfillment network and reflects our continued focus on technology and innovation.”

The executive team at Whiplash is staying with Ryder, the company said.

The purchase price is about equal to current Whiplash revenue, described as 1X revenue. Ryder said Whiplash would add approximately $480 million in gross revenue to the SCS segment next year; that is also the figure it is paying for Whiplash. 

Asked about the 1X valuation, the Ryder spokeswoman said “although the numbers may imply 1X revenue, we have not disclosed our method for determining the purchase price.”

What’s more significant is just how much bigger Ryder’s last-mile business will be after the acquisition, which is expected to close by the end of this month or early next year. 

In the Ryder 10-K annual report for fiscal 2020, Ryder said last mile accounted for about 10% of SCS revenue.

Based on three quarters of revenue so far this year, SCS is on track to have about $3 billion in revenue in 2021, based on nine months’ SCS revenue of just under $2.3 billion. If the 10% figure for last mile in 2020 carried into 2021, that would put last-mile revenue at Ryder this year at about $300 million, not including Whiplash.

But the spokeswoman for Ryder said the company estimates the value of its last-mile business at $400 million. Based on that number, the $480 million in revenue that Ryder says it expects to record from Whiplash would more than double Ryder’s last-mile revenue.  

Besides adding $480 million in revenue next year, Ryder said it expects the deal to be immediately accretive to earnings.

Ryder, in its email to FreightWaves, said Whiplash specializes in e-commerce and omnichannel order fulfillment. It described the company’s primary areas of activity as apparel/accessories, health/beauty/cosmetics, footwear, and small consumer electronics.

Key customers cited by Ryder include Macy’s, RG Barry, Ross Stores and SodaStream. On the e-commerce side, Ryder said Whiplash has added more than 250 “leading e-commerce brands” since 2018.

Whiplash will bring Ryder several new facilities, ranging from three in Southern California to three on the New Jersey side of the Hudson River. There are also facilities in Ohio, Florida and the state of Wahsington. Ryder also said Whiplash will give it “four-corner coverage” of major U.S. ports, citing Seattle/Tacoma, New York/New Jersey, Long Beach and Savannah, Georgia.

“Whiplash has built a proven model that meets today’s consumers where, when, and how they choose to engage with brands — whether that’s online from a mobile device or laptop, in-store, or a combination,” SCS President Steve Sensing said in the Ryder statement. “We expect that our combined customers will benefit from that additional flexibility as well as Ryder’s vast nationwide network, extensive technology suite, best-in-class warehouse management practices, and end-to-end transportation logistics solutions.”

The Whiplash deal is the second acquisition the company has made for its SCS segment this quarter. In October, it bought Midwest Warehouse & Distribution System.

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John Kingston

John has an almost 40-year career covering commodities, most of the time at S&P Global Platts. He created the Dated Brent benchmark, now the world’s most important crude oil marker. He was Director of Oil, Director of News, the editor in chief of Platts Oilgram News and the “talking head” for Platts on numerous media outlets, including CNBC, Fox Business and Canada’s BNN. He covered metals before joining Platts and then spent a year running Platts’ metals business as well. He was awarded the International Association of Energy Economics Award for Excellence in Written Journalism in 2015. In 2010, he won two Corporate Achievement Awards from McGraw-Hill, an extremely rare accomplishment, one for steering coverage of the BP Deepwater Horizon disaster and the other for the launch of a public affairs television show, Platts Energy Week.