XPO saw its financial results improve during a time when its operating ratio typically falters.
That was linked to XPO’s expansion of premium services, such as grocery consolidation, transport to or from trade shows, and retail store rollouts, XPO Chief Strategy Officer Ali Faghri told Trucking Dive.
“If you zoom out, we’re seeing progress across all three different pricing levers that we’re executing on: better service, leading to stronger contract renewals, more local customers, and also more premium services,” Faghri told Trucking Dive.
These are services that customers were asking for, XPO CEO Mario Harik said on the company’s Q3 earnings call Thursday. “And they come at a higher yield. They come at a higher margin, but they also check the box where these are things we were not doing in the past for our customers. Over the last 1.5 years, we launched a half a dozen of these services.”
The carrier has also continued to add 2,500 small- and medium-sized customers each quarter throughout this year, executives said.
Despite that progress, the company is still in the early to middle innings of increasing that kind of higher margin work, Harik said, and it may take a number of years to advance significantly further.
But they’re part of an effort to improve its service and offerings. The carrier has been aiming to reduce a damage claims metric amounting to 0.1% of its LTL revenue. That’s been hovering at 0.3% throughout this year, slightly off from 2024’s record low, but a notable improvement from previous years.
All in all, the company’s OR improved to 83.4% for the quarter, compared to 85% a year ago, under generally accepted accounting principles.
“We were the only public LTL carrier to expand margins this quarter,” Faghri said on an earnings call last week.
“Sequentially, we improved our adjusted OR by 20 basis points in a quarter that typically sees 200 to 250 basis points of seasonal deterioration,” he said.
Its adjusted OR improved to 82.7% in Q3, compared to 82.9% in Q2 and 84.2% during last year’s Q3.
