Dive Brief:
- XPO said restructuring expenses partially drove its Q4 operating income to drop 3.4% year over year to $143 million, according to a Feb. 5 earnings release.
- The company said $23 million in restructuring expenses was from awards granted to the transition in board leadership. Among the changes was Brad Jacobs stepping down from his roles as executive and non-executive chairman of XPO and GXO Logistics in December.
- Despite the quarterly drop in operating income, Chief Strategy Officer Ali Faghri said during a call with analysts that leveraging AI is aiding the carrier to control costs and drive productivity as it manages through a soft freight market.
Dive Insight:
Working more efficiently contributed to XPO’s Q4 revenue rising 4.7% YoY to $2 billion, and its adjusted operating income, a non-GAAP measure, increased 13.8% to $181 million for its LTL North America segment.
Focusing on freight mix and pricing propelled the company to a 12th consecutive quarter of revenue growth, Chairman and CEO Mario Harik said in the release, adding that “AI developments lowered our cost to serve by improving network efficiency and labor productivity.”
Harik added in the earnings call that XPO sees opportunities in the market, particularly in an improving industrial segment and the grocery sector, an area that makes up a small part of its business but that it is growing market share.
On the industrial front, Harik said that continued improvements in the sector could lead to demand recovery.
Such a potential market rebound is why XPO has focused on optimizing its operations. The carrier’s network covers 99% of the U.S. and currently has more than 30% excess door capacity, which positions it well to support a recovering marketplace, according to Harik.
“It's very fair to assume that when you start seeing the watermark of overall demand go up and as capacity starts to dry up, you're going to see more and more customers go to the carriers that do have that capacity,” he said on the call.
