• ITVI.USA
    10,801.870
    -158.520
    -1.4%
  • OTRI.USA
    15.130
    -0.230
    -1.5%
  • OTVI.USA
    10,791.160
    -152.250
    -1.4%
  • TLT.USA
    2.870
    -0.010
    -0.3%
  • TSTOPVRPM.ATLPHL
    2.630
    0.110
    4.4%
  • TSTOPVRPM.CHIATL
    1.910
    0.050
    2.7%
  • TSTOPVRPM.DALLAX
    1.250
    -0.060
    -4.6%
  • TSTOPVRPM.LAXDAL
    2.390
    0.130
    5.8%
  • TSTOPVRPM.PHLCHI
    1.330
    0.070
    5.6%
  • TSTOPVRPM.LAXSEA
    2.750
    0.020
    0.7%
  • WAIT.USA
    103.000
    -17.000
    -14.2%
  • ITVI.USA
    10,801.870
    -158.520
    -1.4%
  • OTRI.USA
    15.130
    -0.230
    -1.5%
  • OTVI.USA
    10,791.160
    -152.250
    -1.4%
  • TLT.USA
    2.870
    -0.010
    -0.3%
  • TSTOPVRPM.ATLPHL
    2.630
    0.110
    4.4%
  • TSTOPVRPM.CHIATL
    1.910
    0.050
    2.7%
  • TSTOPVRPM.DALLAX
    1.250
    -0.060
    -4.6%
  • TSTOPVRPM.LAXDAL
    2.390
    0.130
    5.8%
  • TSTOPVRPM.PHLCHI
    1.330
    0.070
    5.6%
  • TSTOPVRPM.LAXSEA
    2.750
    0.020
    0.7%
  • WAIT.USA
    103.000
    -17.000
    -14.2%
Last MileLogisticsNewsTruckingTruckload

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

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.

Tags
Show More

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.

29 Comments

  1. To the author of this article:

    Can you please list the other options for carriers of LTL Carpet + Flooring? This was a shock to us and we are now scrambling – any info for alternative would be very helpful to your readers. Thanks!

    1. Carpet is done by express global systems. Flooring can be shipped via ltl if it’s on a pallet otherwise use express global systems. All they do is flooring and carpeting.

    2. Matthew: Ideal Transport is a Specialized Furniture Carrier based in Hickory /Conover, NC. We have serviced the Rocky Mountain states (ID, MT, WY, UT, CO, as well as AZ, NM, NE, and Las Vegas,NV) for over 30 years. Although we are a furniture carrier, we may be able to help you with options. Please feel free to contact our office at 828/464-8247; we are open from 8-5 (Eastern). Our hearts go out to the people who are scrambling to find service; please let us know how we can help.

        1. Hey Matthew,
          I work with TQL, we handle LTL freight all over North America. I would be happy to speak with you about some LTL options.

      1. Ideal is a great company. Love there service and the friendliness of the people who work there.
        I can always count on them for help in moving our product.

    3. Hi Matthew, I work with a company called Reliable Product Transport in Dalton, GA. If you have enough volume, maybe you can build your own trailer loads out of NW Georgia. RPT has been consolidating loads of floor covering buyers around the country for over 40 years and it usually cost them a good bit less than sending several LTL shipments daily. Pull all your orders on to one are two trailers each week. Its a viable alternative with enough freight shipping.

  2. Schneider came in and fired all of the Watkins & Shepard terminal managers and put Schneider employees as terminal managers who had no idea how to run an LTL company which screwed everything up

    1. Hey Robert,
      Yes I was aware of that – because once Schneider took over we started to receive rolls of carpet that had boom damage once or twice a week. All Deliveries started to become few and far between. The entire service we had relied up from Watkins for over 35 years was destroyed in one fell swoop. Schneider has no idea how to run what Watkins perfected (for the most part) over all these years. So Terrible – Schneider should be ashamed of themselves. I wish Watkins never sold – we might still have that reliable, quality service, with good people we always depended on… Now we have nothing – Shame on you Schneider!

      1. Yeah, everything about how schneider ran was a mess of left hand not knowing what the right hand was doing and sometimes the two contradicting each other.
        Been a driver for 7 years and the chaos and mismanagement was ridiculous.

    2. I work for Logix Transportation we are a blanket wrapped or boxed ltl carrier out of Minneapolis Minnesota,call us we will haul for you if we can.

  3. Yes this is true! My husband drove for Walkins & Shepard for over 10 years and loved every minute of it! Never missed a day of work! Always worked 60 to 70 hours a week! Schneider took over and because of them he is extremely depressed! He quit the job he loved so much and now will suffer the rest of his liv, no job no money! Paula Crawley (wife)

    1. You know something is really bad when a man who loves to work and all of a sudden he don’t! Because of this take over it has caused him depression, this it’s awful! Now we have to worry about losing our home! It’s a shame and a disgrace! After what we’ve been though were glad to see them shut down! Payback time for them! Yeah.!

      1. I’m very sure that Mark Rourke sleeps very well at night regardless that he and his company have destroyed a once #1 company in the nation built over 42 years in 3 short years and in turn devastated families to the point that there will be those that lose their homes…Sleep well
        Mark Rourke.

  4. The downfall was completely due to the overbearing arrogance of who Schneider thought they were. From the president down through the ranks of Schneider. For a company that has never touched LTL delivery let alone LTL furniture into the e commerce world, to fire most of the Watkins employees and drove away the rest and not take any advise from the former executives is a shameful
    display of arrogance from a cold corporate company. For all those including the editor of this arrival that wonder the reasons for shutting down, it’s 100% due the inept management of Schneider, from the CEO down. But for the 100’s of hard working casualties left in the wake of this shut down is the are the ones that everyone should feel for. Schneider, JB Hunt, XPO, they all have the same mentality and is just a matter of time before the rest fall.

  5. Bunch of Corporate Welfare shitbag trucking company’s ruining the American Dream and trying to bite off more than they can chew… I hope they rot in trucker hell

  6. I drove for Schneider final mile for 3 mo. Recruiting obligation was 2nd worse trucking job I ever had sine 96′ was a good gig but many flaws and very poorly managed to many chiefs not enough Indians u can’t blame the driver I expressed the problems needing attention a dispatcher said becareful of the bridge u burn once again value your driver I’m happy and appreciated greatly now the culture was mixed was good so much potential but scheieder recruiting drivers heavy for a reason. Don’t get me wrong the other department may be good but over all unacceptable what u experienced and they pay was much much worse a big lie. I trusted the 7th largest company becareful bigger is not better

Close