XPO Logistics has announced plans to create separate businesses for its brokerage and LTL operations and to divest its European and intermodal businesses.
Divesting brokered transportation services to XPO shareholders would transform the remaining business into a pure-play less-truck company, while the divestitures would simplify the company’s transportation service offerings.
The result will be two targeted, publicly traded companies.
The spin-off, XPO said in an announcement, would be a leading platform for technology-based truck brokerage services in North America, with a highly efficient digital freight marketplace and access to a vast truckload capacity, with add-on, lightweight offerings for last mile logistics, managed transportation and global shipping. Headquarters are expected to be in Charlotte, North Carolina.
Upon completion of the split, XPO’s North American LTL segment would be pure LTL, the third-largest provider of domestic and cross-border LTL freight transportation, with a network of transportation assets managed by proprietary technology. Headquarters should be in Greenwich, Connecticut.
The company plans to divest its European operations through a sale or listing on a European stock exchange. In North America, the company is currently under exclusive contract in connection with a possible sale of its intermodal business, which provides rail brokerage and drayage services.
“Our two core businesses of North American LTL Truck Brokerage and Technology Brokerage are cutting-edge platforms in their own right, each with a distinct operating model and high return on invested capital,” said Brad Jacobs. , President and CEO. CEO of XPO Logistics, in a press release. “We believe that by separating these businesses through a spin-off, we can significantly enhance value creation for our customers, employees and shareholders, as we did with our successful spin-off from GXO last year. last.”
The news comes after a tumultuous 2021 for the LTL market. UPS withdrew from the LTL business and Central Freight Lines closed. Knight-Swift entered LTL through its acquisition of AAA Cooper. Transervice Integrated Solutions has launched an LTL service and Uber Freight has extended its load matching to LTL.
XPO expects to complete the planned spin-off in the fourth quarter of 2022, subject to various conditions.
Post-split, the remaining business will be the third-largest North American provider of LTL services, with significant competitive advantages, including its position as one of the few nationwide LTL networks in the United States, 130 commercial trucks from driver training schools and a company-owned trailer manufacturing plant in Arkansas, according to the announcements. At the end of 2021, XPO’s North American LTL business segment had an integrated network of 291 terminals, approximately 12,000 professional drivers and approximately 7,900 tractors and 25,800 trailers.
For the full year of 2021, the company generated $4.1 billion in revenue, $618 million in operating profit and $904 million in adjusted EBITDA, as well as the second best ratio of operating adjusted for the LTL industry.
Post-split, the new company will be a technology-based truck brokerage platform with a history of high revenue and margin growth, including a revenue CAGR three times faster than the growth rate of the industry from 2013 to 2021.
The spin-off will inherit XPO’s brokerage automation, giving its customers access to truckload capacity through its XPO Connect digital freight marketplace: 80,000 carriers representing approximately 1 million trucks. The company’s offering will include complementary asset-light services for last-mile logistics, managed transportation and global shipping.
At the end of 2021, the proposed spin-off operations comprised a total of 172 sites and approximately 5,500 employees, with approximately 10,000 customers.
For the full year 2021, the proposed derivative transactions generated a total of $4.8 billion in revenue, $226 million in operating profit and $305 million in adjusted EBITDA.