Parcel disruptor Sendle suspends deliveries as US merger hits the skids after just five months

Australian-founded parcel delivery industry disruptor Sendle has hit the skids following a disastrous turn for its merger with two US companies just five months ago, leading the company to halt all bookings for its customers.

The merger with FirstMile and ACI Logistix to form the new California-headquartered FAST Group has been impacted by a reported withdrawal of support by Sydney-based Federation Asset Management which backed the merger through its Alternatives Investment Fund II.

Business News Australia has sought comment from Federation Asset Management, including confirmation, as reported by FreightWaves, that it had suspended redemptions from the fund because of “due diligence lapses, financial discrepancies and the spectre of bankruptcy” at FAST Group. Federation has yet to respond.

Sendle, which was founded in Sydney in 2014 to support small businesses and sole traders, services clients across the US, Australia and Canada.

The merger to form FAST Group was lauded by Sendle co-founder James Chin Moody as representing a “significant leap forward” for its customers after more than a decade of making shipping “simple, reliable and affordable for small businesses”.

However, the company has just announced that it is halting all bookings for parcel pickup and delivery, effective immediately, and that any existing bookings scheduled for pickup on 12 January or later will be cancelled.

“We understand this may be disruptive to your business and we apologise for any inconvenience caused,” says the company. 

According to FreightWaves, a US-based specialist supply chain and logistics publication, problems with the merger came to the surface a month ago when Federation informed investors that it had frozen redemptions from the Federation Alternatives Investment Fund II which was estimated to be worth about $23.8 million in October last year.

FreightWaves reports that Fund II has 64 per cent of its capital in FAST Group with redemptions suspended after the asset manager found “significant deficiencies” in the financial statements of ACI Logistix after the merger was finalised.

When the merger deal was announced last year, ACI Logistix was described as a “pioneer in US national logistics” that brought to the deal "enterprise-grade infrastructure, automation and sortation facilities".

ACI Logistix CEO Keith Somers became CEO of the FAST Group following the merger and the company’s board also includes representatives from all three merger parties.

Sendle’s suspension of pick-ups and deliveries has thrown the plans of hundreds of Australian small businesses into turmoil.

Interparcel Australia and New Zealand is among the first of Sendle's competitors to step in to fill the void, noting that thousands of parcels are potentially stranded nationally following Sendle’s move.

“My phone has been ringing since the news broke,” says Steve Zammit, the CEO of Interparcel Australia and New Zealand.

“When a logistics provider stops overnight, small businesses are the ones left exposed.

“Right now, there are merchants with stock ready to go and no clear way to move it. Our message to them is simple: we can help you.”