Dive Brief:
- XPO grew its local shipment count by more than 10% year-over-year in Q3, despite overall shipments decreasing more than 3%, CEO Mario Harik said on an earnings call Wednesday.
- The Connecticut-based LTL carrier has added 8,000 new local customers so far this year as it improved service and reopened 21 of the 28 service centers it acquired from bankrupt Yellow Corp., he said.
- “That's going to continue to accelerate as we head into next year,” Harik said. “In terms of local versus large customers, for us, local is growing.”
Dive Insight:
XPO’s local shipments, which deliver higher yield and margins compared to other freight, grew from last quarter and helped buoy Q3 revenue by 1.9% YoY in a persistently tough freight environment.
The carrier’s growth in its local business and premium services combined with its fifth-consecutive quarter of contract renewals in the high single digits to lift yield, excluding fuel, by 6.9% YoY in the quarter.
XPO simultaneously lowered purchased transportation costs by 40% YoY, and the company expects to complete its linehaul in-housing initiative by the end of 2024 — three years ahead of schedule.
“We were the only publicly traded LTL carrier to improve margins in the third quarter,” Chief Strategy Officer Ali Faghri told Trucking Dive in an interview. “That goes back to very effective yield management and strong cost control that allowed us to offset the soft demand environment to deliver these strong results.”
XPO invested in its local operations with a 25% increase in local sellers, whom the carrier expects to provide more runway to grow that business next year.
“Local accounts are a key part of our strategy and an opportunity to earn market share at a favorable margin,” Faghri said on the earnings call.
