RXO Reports Continued Brokerage Volume Growth for Q1
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RXO experienced its fourth consecutive quarter of double-digit brokerage volume growth for the first quarter of 2024, the company reported May 2.
The Charlotte, N.C.-based asset-light transportation provider posted a net loss of $15 million, or negative 13 cents a diluted share, for the three months ending March 31. That compared with zero dollars during the 2023 period. Total revenue decreased 9.6% to $913 million from $1.01 billion.
RXO ranks No. 20 on the Transport Topics Top 100 list of the largest logistics companies in North America.
“In the first quarter, the prolonged soft freight environment continued,” CEO Drew Wilkerson said during a call with investors. “We continue to strategically manage our mix of contract and spot volume. Contract business represented 79% of our mix in the quarter, and positions us well to earn spot volume and project loads when the market improves.”
Wilkerson noted that severe weather caused a temporary market squeeze toward the beginning of the quarter, but conditions improved as the weather subsided. RXO over that time worked to lower purchased transportation costs. Wilkerson added that gross profit per load and gross margins improved each month as the quarter progressed.
“We build our business on four main growth drivers: service, solutions, innovation and relationships,” Wilkerson said. “When it comes to service, we understand that every shipment matters to our customers, and we work to deliver a great customer experience that delivers value at every touch point. We offer a wide variety of solutions to meet every freight transportation need.”
RXO has released its 1Q 2024 results today, including double-digit brokerage volume growth for the fourth-consecutive quarter. #GrowGrowRXO https://t.co/O1SKaFVI5w — RXO (@rxoinc) May 2, 2024
Wilkerson added that approach involves innovating and designing technology that leverages data to help customers and internal stakeholders improve decision-making and productivity. It also means forging multilayered relationships with customers that are built on trust.
“Our focus on these areas has enabled us to grow quickly,” Wilkerson said. “Because of the trust customers have in us and the value we create for them, our companywide sales pipeline is the largest it’s been in four years. We recently made an organizational change that will position us to win even more customer business; we moved our freight forwarding business under managed transportation to help create more comprehensive solutions for our customers.”
Check out Transport Topics' updated Top 100 list of the largest logistics companies in North America, and explore how the industry's top players have adapted to a tough freight market and are preparing for the future. Tune in above or by going to RoadSigns.ttnews.com.
Wilkerson noted that the macroeconomy remained reasonably healthy. He believes that employment, wage growth and retail inventory positions were encouraging. He also noted that the data was more mixed than prior quarters and pointed out that the gross domestic product grew at a slower rate than expected while inflation remained sticky.
“The freight market remained soft. All major freight market [key performance indicators] weakened as the quarter progressed,” Wilkerson said. “The quarter was mixed in terms of carrier exits. While carriers left the market every month, the rate of exits was slower than anticipated, and in some weeks, the total number of registered carrier authorities actually increased.”
Truck brokerage revenue in Q4 decreased 6% year-over-year to $564 million from $600 million. Volumes for the segment increased 11% year-over-year with full truckload and less-than-truckload growth. Full truckload represented 83% of volumes in the quarter. This marks four consecutive quarters of double-digit brokerage volume growth.
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“Within brokerage, our gross margin was 14.2% in the quarter,” Wilkerson said. “In complementary services, on a year-over-year basis, managed transportation again grew the number of synergy loads it provided to truck brokerage. In addition, in the first half of this year, managed transportation was awarded, or is onboarding, more than $350 million in freight undermanagement.”
Complementary services revenue declined 12.1% to $384 million from $437 million year-over-year. Loads provided by the managed transportation business increased from the 2023 period. Gross margins were down 20 basis points to 20.6% for the quarter. The segment includes freight forwarding, last-mile and managed transportation services operations.
• Last-mile revenue decreased 3.3% to $232 million from $240 million.
• Managed transportation revenue decreased 17.1% to $97 million from $117 million.
• Freight forwarding revenue decreased 31.3% to $55 million from $80 million.
