XPO Confirms Job Cuts to Reduce Labor Costs
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GREENWICH, Conn. — XPO, one of the world’s largest freight transporters, is reducing its workforce as part of a cost-cutting plan.
Executives noted the downsizing in their review of the the company’s first-quarter financial results, which were released in early May. Through their plan, they said that XPO would produce more than $50 million in labor-related savings on an annual basis.
“If you look at the first quarter, for example, head count was down about 1 percent sequentially [from the fourth quarter of 2022],” Chief Strategy Officer Ali Faghri said in an earnings call May 4. “And given the cost actions that we announced, you should see a bigger step down in the second quarter in head count. And then we should see further reductions in head count in the second half of the year.”
During the call, CEO Mario Harik also alluded to the job cuts.
“On the labor side, we’re executing on a plan to align our field cost structure more closely with the current demand environment and reduce some of our salaried head count,” Harik said.
In response to an inquiry from Hearst Connecticut Media about it was reducing its workforce, XPO said in a statement that, “the cost actions we discussed on the call have already been taken. They represent greater than $50 million of annualized labor-related cost savings, and we expect to see the full run rate benefit of those cost savings starting in the third quarter. As a results of these actions, head count will take a step down through the rest of the year, primarily through attrition.”
XPO has about 38,000 employees worldwide, across 558 locations, serving approximately 48,000 customers. In Connecticut, it has more than 125 employees across its headquarters at 5 American Lane, in Greenwich’s northwest corner, and terminals in Bridgeport and Meriden.
In Connecticut, XPO employees are part of the trade, transportation and utilities sector. Statewide, there were about 297,000 jobs in the sector in March, down 1 percent year over year, according to state Department of Labor data.
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While they are cutting costs, XPO officials said that they were still encouraged by the company’s recent results. In the first quarter, the company’s revenues totaled about $1.9 billion — up 0.7 percent year over year. The company produced a quarterly profit of $14 million, compared with $488 million in the same period last year. The difference in the bottom lines reflected a quarterly loss of $3 million on discontinued operations, net of taxes, versus a gain of $456 million in that category a year ago.
“You saw us report a solid quarter despite a challenging macro environment,” Harik said.
XPO shares closed May 8 at $48.44, up around 1 percent from their closing total May 5.
Ranking No. 291 in last year’s Fortune 500 list of the largest U.S. corporations, XPO has undergone sweeping changes in the past couple of years. Last November, it completed the spin-off of its truck-brokerage business, RXO, which is headquartered in Charlotte, N.C. XPO officials have said that they believe the company will be more effective as a “pure-play” specialist in less-than-truckload shipping. As one of the largest LTL providers in North America, XPO produced $1.12 billion in LTL revenues in the region in the first quarter, compared with $1.11 billion a year ago.
In March 2022, XPO sold its intermodal shipping business for $710 million.
The company’s transformation started in 2021 when it spun off its warehouse-focused business into its own publicly traded firm. GXO Logistics, which is headquartered next to XPO on American Lane, ranked No. 430 in last year’s Fortune 500.
XPO ranks No. 3 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. GXO ranks No. 6 on the TT Top 100 list of the largest logistics companies.
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