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Sudden shutdown of Schneider final-mile unit leaves furniture shippers scrambling for options

Furniture executive: Watkins & Shepard was `backbone’ of retail delivery to the home

Final-mile rides off into the sunset (Photo: Jim Allen/FreightWaves)

When truckload and logistics giant Schneider National Inc. (NASDAQ:SNDR) acquired less-than-truckload (LTL) and truckload carrier Watkins & Shepard Trucking Inc. and final-mile and IT provider Lodeso Inc. in June 2016, it envisioned penetrating the business-to-consumer e-commerce category with a holistic, “first-to-final-mile” shipping service for furniture and carpeting orders.

The vision died August 1 when Schneider said it would immediately halt the unit’s operations due to what the company called results that were “significantly below expectations.” The unit struggled mightily despite ongoing investments, the most recent being in mid-April when Schneider added middle-mile capabilities to connect the network’s multiple terminals. The Green Bay, Wisconsin-based concern said the unit lost $26 million in the first half of 2019 and was on track to lose another $9 million in the third quarter. The company will take $50 to 70 million pre-tax restructuring charges through the end of the year, apart from a one-time, $34.6 million goodwill impairment charge in the second quarter. 

The operation will be fully shuttered by December 31, 2019. Schneider said it would do its best to accommodate shipments already in the pipeline. It declined any further comment.

The shutdown raises questions about the ability of a truckload carrier culture to adapt to the very different operational realities of e-commerce fulfillment, with complex hub and terminal operations that run counter to a truckload carrier’s linear network. Virtually every truckload carrier has explored final-mile for its revenue potential, but most have stayed away. Schneider and rival J.B. Hunt Transportation Services (NASDAQ:JBHT) have been the two carriers with truckload roots that have been most aggressive in final-mile. (Hunt declined to comment for this article.)

For furniture retailers, the questions are less big picture and more immediate, such as who is going to move goods that aren’t already on the move. Founded in 1974 and with a fleet of 943 trucks, 2,043 trailers and 781 drivers, Watkins & Shepard was the backbone of almost every furniture retailer’s delivery operation, according to an executive of a furniture e-tailer that has used Watkins for years. It continued to do so after the Schneider acquisition, and is now looking for alternate supply sources for 70 to 80 percent of its traffic. 

Watkins, which focused on the line-haul portion in the Schneider ecosystem, long ago mastered the complexities of the vertical, where a mess-up could result in thousands of dollars in claims. Retailers would opt for an operator like Watkins rather than more generalized providers because the incidence of damage using the latter group was too frequent and costly, the executive said.

“There isn’t a single furniture retailer that doesn’t rely on Watkins to some degree,” said the executive in response to a query as to how many retailers will be affected by the shutdown.

Because Schneider would not explain the reasons for closing the business – it may have been a straight-forward move to shutter an underperforming non-core competency – it is unclear whether the unit suffered from weak demand, unacceptable costs or a combination of both. The executive surmised that the problem lay with the Lodeso last-mile operation, which was touted as a “white-glove” service where furniture is brought into the house, positioned in the proper place, assembled if necessary and old furniture, again if necessary, hauled away, along with all packing materials.

Lodeso was known mostly for its technology platform, which received and processed online orders from retailers and manufacturers and connected those requests with an agent network of about 600 carriers, one of which was Watkins. However, its last-mile delivery performance left much to be desired, the executive said. Damage was too frequent and claims ran unacceptably high. This led many retailers to leave the unit or avoid it altogether. According to the furniture e-tailing executive, the retailer never used Lodeso for the residential delivery portion for fear of product damage.

To compound the unit’s difficulties, it bore the high costs of building out a dense last-mile infrastructure all the while demand was declining. It had 20 U.S. terminals as of June 2016. This perpetuated a vicious cycle of losses that Schneider could no longer tolerate. The e-tailing executive said the company did not use Lodeso, and had no problems with the Watkins line-haul service. 

The company expects that goods already tendered to Schneider will be delivered in a relatively timely fashion. It already has other providers lined up to take Schneider’s place, the executive said.


  1. Alonso

    I was one of the original Watkins’s shepherd drivers that was just let go , with in one week notice I was gone and told I was getting a severance package , huh 3 years of service and Schneider payed me $500 package what a bunch of Fuck Shits . Watkins took care of there employees and really wish they could come back into the industry . Schneider destroyed Watkins

  2. Nicholas Tarry

    Hi i was a driver from watkins shepard from late 2016 til aug of 2019. As far as most of us driver are concerned. The ones who didnt leave due to the outrage are still with jobs. Ill be it slightly lower pay. We know for a fact that Schneider couldnt handle the operations day to day due to lack of knowledge, further interference and constant micromanaging along with the rapidly increasing amount of driver elds and assit technology caused many of us to up and leave before the shut down. Simply put. Schneider drove us out and put younger drivers on accounts that they couldnt handle. The volume and actual labor alone goes against what the big orange guys know. Thats a factor. And this is only speculation. But it is a rumor that is traveling around the remaining Watkins drivers waiting to transfer. But schnieder simply did not wanna pay the previous owner the remainder of the purchase cost of the company. A law suit is in progress. And Schneider simply shut us down to cover the costs. And will be selling all of the assets that watkins shepard has to cover their butts. Let me reiterate. This is simply a rumor i have no proof. But its an avenue to look down.

  3. Angela W.

    We are feeling the pain after the loss of Watkins & Shepard Trucking, especially after having Schneider arrange for a shipment using YRC that arrived quite literally in pieces on a trip from NH – NY. Any good LTL furniture movers in New England, NY & NJ that we should be in contact with now that we will not be shipping through Schneider any longer?

  4. Thorpe Steele

    Executive compensation last year for Schneider brass was over $20 million including $4.1 million for CEO Mark Rourke. Doubtful there will be consequences for the $50+ million in losses, worker layoffs, facility closings, glut of unused assets and dwindling market presence. Now just a typical Wall Street casino capitalism racket that is more loyal to shareholders than its employees. Used to be a good company – just a damn shame. “Some rise by sin, and some by virtue fall.” -Billy S.

    1. Matthew

      Watkins should buy their company back or pick up where they left off after seeing their company be destroyed in a 3 short years??!!

      I wonder why Watkins even sold their company to Schneider in the first place…?

      And we know about xpress global and braun’s But Braun’s is terrible and xpress was very costly. I guess we will have to wait and see who emerges from the ashes….

    2. Matthew

      I agree that a CEO shouldn’t be getting bonuses if his company is failing. You don’t need to take it to the level of making this an attack on capitalism – it isn’t the enemy here. Morons at the helm are – And sometimes you can’t help stupid.

Comments are closed.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.