XPO Sees Volume Surge as Digital Economy Transforms Logistics

Headed into the holiday season and well beyond, the freight industry and the ongoing overhaul and modernization of supply chains and the middle and last miles are top of mind.

And of course, right at this writing, we’re deep in the midst of earnings season.

To that end, XPO Logistics issued preliminary financial results for the third quarter. In its announcement, the company said that, for its North American truck brokerage business, the third-quarter data should show a year-over-year increase in volume of approximately 9%.

Looking at the Longer Term

And with a nod to the longer term, where the company will be spinning off its freight brokerage business, through 2027, revenue growth should see a compound annual growth rate of 6% to 8% for its North American less-than-truckload segment. For the RXO spinoff, the stated target through the same period would see adjusted EBITDA between $475 million and $525 million by 2027. EBITDA, we note, is a rough measure of cash flow, and the guided range would be significantly higher than the roughly $300 million for that same metric through the most recent fiscal year.

Wall Street can, at times, be a game akin to “inside baseball,” where analysts and investors parse metrics like EBITDA, and we’ll know more when the company officially releases results at the end of the month. But the implication of the release is clear: Growth is in the cards. And XPO remains part of the ConnectedEconomy 100 Stock Index, part of the “Move” pillar that in turn is down 32% YTD.

Beyond the vagaries of stock prices, the underpinnings of greater connectivity, where advanced technologies help improve data flow and analysis — and by extension, supply chains — are well-cemented.

As noted over the summer, in one example, XPO Logistics and Google Cloud said in June they have partnered on a multi-year deal to “further innovate how goods move through supply chains.” As part of the initiative, XPO will use Google Cloud’s expertise in artificial intelligence (AI), machine learning (ML) and data analytics to build better visibility within those chains. XPO Connect, the company’s tech platform, gives shippers and carriers real-time insight into freight status and delivery. The company has noted that lets client shippers and carriers integrate with XPO Logistics LTL via application programming interfaces.

The spinoff itself was announced back in 2021, and the carved-out entity, to be known as GXO, according to the firm, will be among the largest logistics providers in the world. In examples of leveraging high tech to streamline the intricate web of interplay that gets goods where they need to go, XPO had said that it had successfully piloted wearable barcode scanners in tandem with tech partner Prelove.