Dive Brief:

• XPO Logistics opened a 150,000-square-foot LTL service center in the Chicago-area Sunday to expand capacity as demand skyrockets from the growth of e-commerce and a rebound in manufacturing, the company announced during the facility's opening.
• The center in Chicago Heights, about 30 miles southeast of the city, has 264 dock doors and will largely handle industrial parts, bulk goods and other types of palletized freight, according to service center manager Mark Curcio.
• The facility is a "massively important part of the plan to expand our capacity," XPO's CIO and acting LTL President Mario Harik said at the event, adding it will more than double the amount of space available to service customers in the area.

Dive Insight:

XPO's new service center is its 14th in Illinois, a critical logistics hub as Chicago is a one-day truck drive away from 30% of consumers in North America according to World Business Chicago.

"We really are in the focal point of the country, almost everything flows through Chicago," said Curcio, who will lead the facility in Chicago Heights.

The Chicago area has emerged as a choke point within the last few months as carriers struggle to keep up with a deluge of freight coming from the coasts. The average unload dwell time for Schneider's intermodal customers jumped 70% from pre-pandemic levels, Schneider President and CEO Mark Rourke said in August.

Dwell times in Chicago hit an average of 9.3 days, according to a Hapag Llyod analysis of its own boxes. Congestion at inland rail container ramps has slowed the flow of goods and contributed to major backlogs, pushing railroads to temporarily suspend service over the summer.

XPO's new center also comes as the company expects industrial demand to rebound, which would add to the demand. The manufacturing industry has been working to overcome supply chain bottlenecks and ramp up production.

The company wrote in a September investor presentation that it's been steadily working to build up "the massive capacity needed to serve this increased demand" in manufacturing and in e-commerce.

While e-commerce has been a major driver of growth among LTL carriers, XPO said the resurgence of manufacturing has also boosted demand for its services. XPO's LTL business posted its "strongest growth rates" since it began in 2015 with the acquisitions of Con-way and Norbert Dentressangle, Chief Strategy Officer Matt Fassler said in a Q2 earnings call.

"The acceleration in growth for our largest vertical, industrial and manufacturing, outpaced the pickup in retail and e-commerce," said Fassler.

Over 200 employees will work at XPO's new site, including drivers, dockworkers, shop technicians and customer service representatives. The center will also host one of the company's driving schools, a program that's recently been overhauled to attract more workers during a national labor constraint.