Dive Brief:
- XPO reduced its outsourced linehaul miles to make up just 8.8% of total miles, “the best level in the company's history,” CEO Mario Harik said during an April 30 Q1 earnings call.
- The company said as it insources more linehaul, it is becoming more efficient and is able to reduce costs. “Our expense for third-party carriers decreased by 53%, compared with the prior year, as we insourced more of our linehaul runs,” CFO Kyle Wismans said on the call.
- With the cutback in linehaul outsourcing, the LTL carrier was able to reduce its purchased transportation expenses by $41 million, Wismans added.
Dive Insight:
XPO’s linehaul in-housing initiative was to reduce outsourcing to the “low teens by 2027,” Harik said in Feb. 2024. While XPO mentioned back in 2021, it reached its goal three years ahead of schedule in 2024, Harik said earlier this year.
Still, the LTL carrier is continuing its efforts to reduce linehaul outsourcing.
“Even with truckload rates being depressed, when we move freight with our road flex operation, we're paying less per mile than we would with a third-party carrier,” Harik said, adding that XPO gets 5%-6% more physical space by using two smaller trailers instead of one large one to help execute more insourced linehaul moves.
XPO has added more than 5,000 tractors and 16,000 trailers to its network since launching its LTL growth plan in 2021, Harik said.
The company has also added more than 2,000 new doors to its network, which include the acquisition of service centers previously operated by Yellow Corp., according to an 10-Q filing.
“By year end, we expect to reduce outsourced miles even further, into the mid-single digits, enhancing efficiency and customer service,” Harik said.
In relation to linehaul, XPO recently deployed artificial intelligence-driven linehaul models to optimize freight flows across its network. With the technology, the carrier expects to minimize distance freight travel and the number of times freight is handled, Jay Silberkleit, XPO’s chief information officer said.
