Dive Brief:
- XPO will add a net 2,000 doors of capacity to its network once it integrates the 28 former Yellow Corp. truck terminals it acquired in last year’s bankruptcy auction, CEO Mario Harik said during a Q4 earnings call Wednesday.
- The carrier won about 3,000 doors total, more than any other bidder at the auction. And while half of the facilities will expand the size of the LTL carrier’s real estate network, XPO will move operations into others from smaller, existing locations nearby, Harik said.
- XPO expects significant savings from the properties and will spend 2024 and 2025 reopening them, Chief Strategy Officer Ali Faghri told Trucking Dive in an interview. “We expect to have all of them integrated in the network sometime over the next 12 to 18 months,” Faghri said.
Dive Insight:
XPO hopes acquisitions will help it achieve its ideal 25% to 30% excess capacity target, while positioning it to take on more business as freight demand picks up in the future.
“This would enable us to flex up whenever that demand comes back,” Harik said on the investor call.
But properties may need repairs or upgrades, given deterioration under its previous owner. Once those are complete, XPO will reopen the terminals in batches.
The first dozen or so will open in the next three to six months, with the next dozen over the following six to 12 months, then the last four or five after that, Harik told investors.
Former Yellow terminals acquired by XPO
The CEO said he does not anticipate the major real estate acquisition, financed with an $870 million loan, dragging the company’s operating ratio. The carrier achieved an LTL adjusted operating ratio of 86.4% in Q4, according to an earnings report.
“The majority of the service centers are in markets where we already operate,” Harik said. “The carrying cost of real estate is fairly low on a per-door basis, but we get the immediate benefit of cost efficiencies and cost savings associated with having a larger facility to operate from.”
