What You Need to Know About XPO's Potential Restructuring

Jan 22, 2020


Last week, XPO announced that it may sell or spin-off one or multiple business units in order to increase its valuation.

What's important to know is that they're working with major banks (Goldman Sachs and J.P. Morgan) to run four simultaneous auctions for different business units and may sell all or none of these.

The business units for sale are XPO’s European transportation, European supply chain, the North American transportation, and its supply chain business in the Americas and the Asia-Pacific. The timeline is open ended for when these sales could happen. 

The one unit they're planning to keep is their North American less-than-truckload business.

This is a large reversal for XPO, which grew from a $150 million expeditor in 2011 to a $17 billion multi-modal logistics operation by the end of 2019. Despite their strong record of growth, XPO has been suffering from low valuation, and is seeking a way to make the business more appealing.

This change in strategy indicates once again that the LTL market is ahead of the pack in terms of making and managing profit. 

With respect to your LTL operations, here are three questions to consider:

  1. Have you created and tracked a "LTL map" that defines how and where you spend your LTL budget?

  2. Do you have a strategy for how you manage LTL spend, and does that strategy include the use of “what if” questions?

  3. Are you aware of the tools you we need to make sure that you can manage your LTL spend in a world-class or in an above-average way?

The LTL market will be a challenging environment for some time, but with the right strategy you can make the most of your budget.