Dive Brief:
- XPO has opened two new service centers, one in Mesa, Arizona, and another in Cameron, Missouri, the carrier announced Oct. 1, as part of a long-term strategy to improve service.
- The facilities expand the company’s capacity to meet growing freight demand in the metropolitan areas of Phoenix and Kansas City, per the release.
- Matt Carroll, president of XPO’s west division, said the new terminals advance the company’s strategy of investing in its network and deepen its presence in two critical freight markets. “We’ve added capacity where our customers need it most,” he said in the release.
Dive Insight:
XPO noted its recent surge in tonnage growth coincided with the rebounding manufacturing sector.
The carrier said its new 51,000-square-foot Mesa site, which features 86 doors and is staffed by over 100 workers, complements its nearby Phoenix service center by adding capacity to meet increasing freight demand from growing industrial investment in the region and cross-border trade with Mexico.
Additionally, its new 13,000-square-foot Cameron facility with 32 dock doors and over 30 workers is situated near I-35 and U.S. 36, which enables more efficient freight movement along key north-south and east-west freight corridors in the Midwest, XPO said.
XPO’s newest service centers grow its North American network to 300 sites that provide direct service to 99% of U.S. ZIP codes and cross-border service to and from Canada and Mexico, the press release said.
The LTL carrier’s capital and technology initiatives appear to be paying off. Bank of America Securities analysts noted in a recent report that XPO “continues to show solid momentum in narrowing the pricing and margin gap to its best-in-class peer ODFL, supported by accelerating share gains, stronger yields, and AI-driven productivity.”
In the long term, XPO can improve service and add local customers with these kinds of additions to further close the gap between itself and competitors such as Old Dominion Freight Line, Bank of America Securities analysts noted.
Altogether, XPO said it has opened nearly 35 new service centers since 2021, which increased its door capacity 15%. Many of those locations came through its acquisition of 28 service centers through the Yellow Corp. bankruptcy auction.
Other carriers have also expanded their networks in recent months in preparation for improving market conditions. Companies including Saia, Estes, and AAA Cooper have added doors in anticipation of a freight upcycle.
While the latest Institute for Supply Management’s Purchasing Managers’ Index for manufacturing reflected nine straight months of expansion in September, inflation and geopolitical unrest continue to weigh on manufacturing.
Additionally, investment firm TD Cowen said in an analyst note it was monitoring how the recent surge in fuel and diesel costs could impact peak season and consumer demand, noting “through Q2 earnings, most carriers did not assume the fuel spike that occurred in September; that has caused multiple carriers to reset expectations through investor conferences.”
