Dive Brief:
- XPO reported Q3 revenues jumped 12.4% year over year to $2.4 billion, the company announced Thursday.
- The LTL carrier credited the overall growth to improvements in yield, revenue per shipment and a focus on higher-margin freight from customers seeking top-line service, per the release. In North America, shipments per day and tonnage per day also increased by at least 5% YoY.
- “Our strong performance across North America and Europe underscores the substantial opportunities we have to continue compounding our earnings growth, with further upside as freight demand recovers,” Chairman and CEO Mario Harik said in the release.
Dive Insight:
XPO’s investments to increase door capacity and boost efficiencies by integrating its proprietary artificial intelligence technology throughout its operations have provided the company momentum to grow market share in a recovering freight market, executives said on the call.
“When executing a powerful strategy focused on service, investments and capacity, pricing and cost efficiency, each component reinforces the others,” Harik said. “Together, they’re driving an acceleration in our growth.”
Where XPO sees opportunity is with small- and medium-sized businesses, shippers that prioritize premium services, Harik said. This would include industrial customers, which typically have heavier shipments that generate more revenue.
Ongoing service improvement efforts to keep damage claims low is core to the company’s growth strategy, Harik said on the call with analysts.
“For the shipper, damage-free delivery means fewer business disruptions, less time resolving claims and greater confidence that freight will arrive as expected,” he said.
In addition, Harik said the recovering manufacturing sector contributed to the carrier’s increased tonnage in Q3. The company reported a YoY improvement in tonnage per day at 5% and saw shipments per day improve 5.8% from a year ago.
But manufacturing isn’t the only segment being targeted by XPO, Harik said.
“We’re seeing a lot of success there, and also growing premium services as well as some new verticals we’ve been targeting, whether it’s healthcare or grocery consolidation,” he said.
For the near term, XPO executives are confident the freight market recovery is sustainable. Old Dominion Freight Line expressed similar sentiment based on the rebounding manufacturing sector.
“On the demand outlook, what we are seeing here in the back half of the year is continued positivity and year-on-year positive demand from the customers,” Harik said.
