Dive Brief:
- XPO’s North American LTL segment operating income jumped nearly 20% year over year to $189 million, driven by market share growth and above-market pricing gains, the company reported April 30.
- North America LTL revenue grew 4.9% to $1.23 billion as shipments per day grew 3% YoY and tonnage per day increased 0.1%, per the earnings release.
- The carrier expects its strong start will carry through the year as U.S. industrial activity improves. “For us as an LTL carrier, about two thirds of our business is tied towards industrial customers, which is why we’re so highly correlated with what’s going on with underlying industrial demand domestically,” Chief Strategy Officer Ali Faghri said in an interview with Trucking Dive.
Dive Insight:
Investments in equipment, technology and terminal capacity in recent years have positioned the company to move quickly on an improving freight environment, Faghri said.
He said the company now has over 30% excess door capacity throughout its network, so as volume recovers, the carrier has the means to handle industrial upswings. Faghri referenced the Institute for Supply Management’s latest Purchasing Managers Index for manufacturing, which has shown four straight months of manufacturing expansion.
“As you’ve now started to see that industrial demand start to improve after several years at very soft trends, that’s leading to better demand for us as well,” he said.
Growing its sales force has also been a company focus, Faghri said. This has led the carrier to make inroads with niche markets including small and medium-sized manufacturers “with a few $100,000 per year of annual freight spend,” he said.
Faghri said a larger sales force also created opportunities to showcase its premium services, such as Must Arrive by Date. It has also translated to strengthening its specialty segments including retail store rollouts and grocery consolidation type services.
“All of these are new services that we've been able to roll out for our customers to support them, and they've allowed us to also grow and grow above the market” recently, Faghri said.
He said the company is confident that improving market conditions will continue throughout the year. Its initiatives to boost customer service, which led to a drop in its damage claims ratio to less than 0.2%, will also aid the carrier in growing market share, Faghri said.
“The last few years we’ve been investing significantly in our network,” he said, noting how that is setting the carrier up to outperform as demand starts to improve.
