XPO Q2 Profit Jumps as LTL Shipments Rise 4.5%

(XPO Inc.)

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XPO Inc. profit jumped in the second quarter of 2024 as revenue increased 8% on the back of a 4.5% increase in North American less-than-truckload shipments and 7.4% rise in the return obtained for those shipments.

Greenwich, Conn.-based XPO reported net income of $150 million in the most recent quarter, compared with $33 million in the year-ago period. It posted diluted earnings per share of $1.25 in Q2, compared with 28 cents in the same period in 2023.

The company generated revenue of $2.08 billion in Q2, an 8% increase compared with $1.92 billion in the same quarter in 2023, which matched consensus analyst expectations, according to Zacks Equity Research.

XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

The company’s North American LTL segment generated revenue of $1.27 billion in the three months that ended June 30, a 12% increase compared with $1.14 billion for the same period in 2023.

Shipments per day for the LTL unit rose 4.5% to 53,519 from 51,220, the company said Aug. 1, while tonnage per day climbed 3.4% to 72.658 million pounds from 70.290 million pounds.

The unit’s revenue per shipment excluding fuel surcharges rose 7.4% year on year to $310.24 from $288.75. XPO’s revenue per shipment has increased year over year for three consecutive quarters, while increasing sequentially for six straight earnings periods.

“In North American LTL, we continued to deliver service at record levels, with the best damage claims ratio in our history at 0.2%,” said CEO Mario Harik. “We also operated more cost efficiently, reducing purchased transportation and increasing labor productivity. As a result, we reported a 51% increase in adjusted operating income and improved our adjusted operating ratio by 440 basis points to 83.2.”

Operating ratio provides insight on how well a company is balancing its costs and revenue generation. The lower the ratio, the better a company’s performance.

Shipments grew as XPO attracted customers previously served by now-bankrupt Yellow Corp. and terminals bought from the estate administrators of the onetime No. 3 LTL player reopened as part of the XPO portfolio after a revamp.

XPO paid $870 million for 26 owned terminals and two leased properties previously operated by Yellow in the first auction of properties by the administrators. The first auction, which began Nov. 28, 2023, saw 128 out of Yellow’s 169 owned properties sold to 21 different buyers for a combined $1.88 billion.

So far, XPO has reopened 14 of the 28 service centers acquired, with another 10 expected to enter service by the end of 2024, Harik said in a statement accompanying the results.

The purchase was a transformational acquisition for XPO, Chief Strategy Officer Ali Faghri told Transport Topics on Aug. 1. “It is still early days, but [XPO is seeing] positive early indications,” he said.

XPO’s new terminals are in fast-growing freight markets, are larger and are located closer to customers than existing XPO assets, Faghri said.

The reopened facilities account for just under 1,000 terminal doors. Before the deal went through, XPO was operating just under 17,000 doors, Faghri said, and the other 14 terminals will add a further 1,000 or more doors. As a result of the purchases, XPO intends to dispose of about 14 facilities, he said.

Following the demise of Yellow, XPO was careful about what business the carrier took on as shippers sought new partners, Faghri said. “It wasn’t about chasing volume,” he said, rather XPO wanted customers with the right profile. “We were very disciplined.”

Another fast-growing market is nearshoring, Faghri said. As a result, XPO on June 17 launched a new service, XPO Mexico+, aimed at expanding its cross-border services between the U.S. and Mexico. Faghri said the expansion would add capacity and destinations for XPO.

Meanwhile, XPO’s European Transportation unit reported a 3.5% increase in revenue to $808 million from $781 million for the same period in 2023.