XPO Logistics to Keep Con-way’s Truckload Shipping Arm
By Robbie Whelan
XPO Logistics Inc. has rejected bids for the truckload shipping business it took on as part of its $3 billion acquisition of Con-way Inc., and now plans to hold onto the unit, Chief Executive Bradley Jacobs said Monday.
Three trucking companies submitted final bids last week to purchase Con- way’s truckload operations, which had been for sale since mid-2015, Mr. Jacobs said in an interview. Truckload businesses typically carry goods on long- distance hauls for one individual customer per truck. Con-way, which XPO acquired in October, mainly operates as a less-than-truckload, or LTL, carrier, combining orders from multiple customers in each truck.
“We went though the process, we compared the offers we got with what we think we could do with it…and I think we can improve it by integrating it and bringing it lots of new customers from our other service lines,” Mr. Jacobs said.
The two business lines use different distribution networks, because LTL carriers often pick up and drop off cargo at more locations than truckload carriers.
XPO has grown rapidly over the last three years through a series of debt- fueled acquisitions that have transformed the company into one of the world’s largest logistics-services providers. The Con-way deal marked XPO’s biggest foray into owning and operating a fleet of trucks in the U.S. Prior to the acquisition, XPO focused on freight-brokerage and other middleman services between shippers and transportation companies.
Since the deal, XPO has laid off about 200 back-office workers at Con-way and closed seven of the terminals it acquired. Earlier this month, XPO sued competitor YRC Worldwide Inc., alleging that YRC had poached several top executives from Con-way Freight, the company’s LTL segment, and stolen trade secrets. YRC had declined to comment on the matter.
Cross-selling its various services to customers is one of Mr. Jacobs’s key strategies to increase revenue at XPO.
XPO’s shares are down 41% in the last year. In November, Mr. Jacobs hired Tony Brooks, a veteran food-and-beverage and retail-industry executive, to lead XPO’s new Con-way LTL unit.
At the time of its acquisition by XPO, Con-way’s truckload business produced roughly 14% of revenue, and operated at a loss in the first half of 2015. Con-way’s total revenue was $2.7 billion in the first half of last year, roughly flat from the same period in 2014. Operating income was $136 million, also roughly flat.
“Now we’re going to go full force on decreasing our empty miles and building on those 10,000 customer relationships we already have,” Mr. Jacobs said.