XPO Logistics [NYSE: XPO]: Revolutionizing the Logistics Experience with Technology

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Bradley S. Jacobs, CEO, XPO LogisticsBradley S. Jacobs, CEO Since the early 1900s, there have been several illustrious leaders that have transformed the different facets of the U.S. freight transportation industry. But, Bradley S. Jacobs, a serial entrepreneur and a seasoned roll-up executive, stands out among the more recent leaders and entrepreneurs for doing something that no one else in the transportation space had ever done. In 2011, Jacobs, with no direct experience in transportation and logistics, successfully acquired a group of small and medium-sized businesses, in a short span of five years, and consolidated them under one name. Today, the conglomerate is well-recognized as XPO Logistics [NYSE: XPO], a billion-dollar company that provides transportation and logistics services to customers in various industries including retail, e-commerce, food and beverage, and consumer packaged goods.

It all started when Jacobs’ family investment firm, Jacobs Private Equity, decided to acquire the majority control of Express-1, a freight expediter based out of Michigan. After the equity investment, Jacobs renamed the firm to XPO Logistics, Inc. and through M&A, spearheaded 17 acquisitions and turned XPO into a billion-dollar business to focus on the broader non-asset segments of the industry. Today, XPO is one of the top ten global providers of transportation and logistics services, with a highly-integrated network of people, technology, and physical assets. Headquartered in Greenwich, CT, the firm operates as a 3PL in 32 countries across the world and has approximately 50,000 customers. While XPO offers its services globally, the company has a strong foothold in the U.S. and Europe in freight brokerage, last-mile delivery, less-than-truckload shipping, and contract logistics. Jacobs, CEO of the transportation behemoth, says, “I want to build XPO to be a multibillion-dollar business within the next several years. The transportation and logistics industry is vast, and I plan on creating a large corporation.”

The Two Main Branches of XPO

XPO has two major business lines: transportation and logistics. While the transportation segment focuses on less-than-truckload, full truckload, intermodal and drayage, global forwarding, managed transportation, and expedite services, the logistics segment offers a wide range of contract logistics services, engineered and customized solutions, and supply chain optimization services.

The multiple transportation services provided by XPO facilitate the movement of raw materials, parts, and finished goods by road, rail, air, and ocean with XPO’s cutting-edge transportation solutions. For example, XPO’s freight brokerage operations, which are non-asset-based, encompass truck brokerage as well as intermodal, drayage, and expedite services. The freight brokerage service places shippers’ freight with qualified carriers, primarily trucking companies. Customers can request loads via telephone, fax, e-mail, electronic data interchange, or internet on a daily basis.

The firm’s less-than-truckload operations, on the other hand, are asset-based, and they utilize XPO’s drivers, fleet of tractors, and trailers for line-haul as well as reliable pallet pick-up and delivery, including night deliveries, expedited transport, on-appointment deliveries, and more. Through these services, customers have access to real-time tracking technology for full traceability of pallets.

If there is one thing that Jacobs believes in, it is that technology will transform logistics and change the way goods are produced and shipped within the next few decades, completely altering global supply chains

Hence, with the help of best-in-class equipment and safety-focused drivers, XPO carries out less-than-truckload operations across all industries with regional, national, and cross-border transport.

XPO also focuses on intermodal operations, providing container capacity, rail brokerage, drayage transportation via independent contractors, and on-site operational services. The firm engages with rail freight providers to offer the long-haul portion of the shipment of freight in container. In addition, they collaborate with trucking companies for the local pickup and delivery legs of the intermodal freight movement. XPO also offers customized electronic tracking and analysis of market prices and negotiated rail, truck, and intermodal rates, in order to determine the optimal transportation routes.

As of 2016, XPO had over 10,000 independent owner-operators on contract to provide drayage, expedite, last mile, and LTL services to its customer, and more than 50,000 independent brokered carriers representing approximately 1,000,000 trucks on the road. In addition, the company also has a global fleet of approximately 16,000 tractors and 39,500 trailers primarily related to its LTL and full truckload operations.

Furthermore, XPO is the second largest contract logistics provider worldwide, with approximately 185 million square feet of facility space. The company’s logistics division offers a range of contract logistics services, highly engineered solutions, and high-value-add services including warehousing and distribution, e-commerce fulfillment, packaging and labeling, inventory management and personalization, and supply chain optimization services. XPO also has efficient processes in place for the management of returned merchandise, including inspection, refurbishment, recycling, disposal, refunding, warranty management, and return-to-retail.

In order further enhance their logistics services; XPO is deploying advanced technologies such as robotics, autonomous vehicles, automated sortation systems, drones, and more to accelerate the supply chain operations across their expansive network of warehouses in North America and Europe.

Technology: The Key Differentiating Factor

If there is one thing that Jacobs believes in, it is that technology will transform logistics and change the way goods are produced and shipped within the next few decades, completely altering global supply chains. In the light of this, the company invests more than 550 million dollars a year in technology. “The future of transportation is IoT, call it the ‘Internet of Transportation Things’. Transportation increasingly is about the flow of information between manufacturers, warehouses, trucks, retail locations, businesses and homes, all equipped with sensors communicating through the cloud; and, technology is the key differentiating factor between different service providers. We are firm believers of this and are investing a great deal to make the internet of transportation things a reality,” adds Jacobs.

Robots and artificial intelligence have already become a part of everyday operations at XPO. The company has incorporated autonomous robots in its warehouses and distribution centers in North America, the United Kingdom along with eight countries in Europe to improve the safety for XPO’s employees.

The company is also using wearable technology such as optical automation and smart glasses to drive accuracy during warehouse filling and drones for inventory management.

XPO continuously resorts to technology to deliver logistics and transportation services. A recent example corroborating this aspect is the company’s shared-space distribution model for omnichannel retail and e-commerce customers, XPO Direct. XPO Direct offers industry-leading flexibility to customers by distributing its technology, trucks, and workforce at over 100 sites. In an era where retailers and e-tailers are seeking new ways to position goods more efficiently to shorten delivery transit times without adding overhead, XPO Direct is emerging as their ‘go-to’ solution. The company’s technology is an e-commerce distribution platform that draws on XPO’s trucking, last-mile/last-touch, and logistics units. XPO Connect is another one of XPO’s most forward-looking innovations. XPO Connect is a virtual marketplace built to support the company’s diverse transportation ecosystem and uses self-learning architecture to help shippers and carriers make supply chain more efficient.

In a nutshell, the behemoth transportation and logistics firm believes that technology is what drives the company’s growth and success. It is what fuels their network by creating efficiency and visibility along with optimizing XPO’s supply chain operations through automation and customization.

"In an era where retailers and e-tailers are seeking new ways to position goods more efficiently to shorten delivery transit times without adding overhead, XPO Direct is emerging as their ‘go-to’ solution"

An Impressive Track Record and a Promising Future

Today, XPO is the top pick for any organization that requires transportation and logistics support. The company provides cutting-edge supply chain solutions to the world’s most successful firms, including Disney, Pepsi, L'Oréal, Toyota, and many others. The firm works closely with every client to understand their entire supply chain and identify opportunities. It is this collaborative approach that makes customers trust XPO without a doubt.

Some of XPO’s recent milestones include being named as one of the world’s most admired companies by Fortune and ranked as the 186th fastest-growing Fortune 500 transportation company. Moreover, XPO was also listed in Fortune future 50 list of companies best positioned for breakout growth in 2018.

Since its outset in 2011, when it was solely focused on truck brokerage, XPO Logistics has evolved and extended its services into other areas of logistics as well, carving a unique niche for itself in the freight industry. “We always wanted to be a multimodal provider. Our goal was to add intermodal early on so that we’d have a comprehensive multimodal offering. Over time, we also added last mile, contract logistics, and LTL and created a real end-to-end capability,” states Jacobs.

With a clear-cut goal to not only be a leading 3PL that helps customers move goods through their supply chains in the most efficient manner possible, but also become a global technology company, XPO is continually applying its technology to bring about a transformation in the transportation and logistics landscape. Going forward, XPO plans on integrating AI with its contract logistics segment. “Our facilities are already using predictive analytics, collaborative robots, and a raft of other smart technologies that leverage data. Down the road, AI is going to help us better understand our customers and serve them better,” asserts Jacobs. Furthermore, XPO is ramping up, hiring staff, and implementing technology to help manage a mountain of freight, especially e-commerce generated shipments, which the company expects will move through its transportation and logistics networks. “We have a long way to go, and we are on board for the journey ahead,” concludes Jacobs.

- Jade Ray
    April 17, 2019