ny, Greenwich, Conn.-based XPO Logistics, has grown into
a $17 billion-a-year giant. It is consistently profitable, defying many of the skeptics. It has attracted billions of dollars
in institutional investment and has an $8 billion war chest
for mergers and acquisitions (M&A). The price of its shares
has risen more than sevenfold in six years, an astonishing
share rise for a logistics firm.
Jacobs recently spoke to Mark B. Solomon, DC VELOCI T Y’s
executive editor – news, about XPO’s strategy, where it is
going (and not going), and what he sees as game-changers.
Q This is a business that has a spotty track record, at best, in successfully executing integrations. What convinced
you that XPO could build a better mousetrap?
A You know the Farmers Insurance commercial? The one where they say “We know a thing or two because we’ve
seen a thing or two”? Well, I guess in M&A, I’ve seen a thing
or two. The teams I’ve led over the years have acquired and
integrated more than 500 companies. I’m fortunate that
some of the key team members from my past experience
are here at XPO.
Q At the start, your focus was on truck brokerage. At what point did you conclude that a pivot was in order to
extend into other areas of logistics?
A It wasn’t exactly a pivot because we always wanted to be a multimodal provider. The first deal we did, Express- 1,
was in truck brokerage, expedited service, and freight forwarding. The goal was to add intermodal early on so that
we’d have a comprehensive multimodal offering. Over
time, we added last mile, contract logistics, and LTL (
less-than-truckload) and created a real end-to-end capability. It
was a way to differentiate ourselves to customers. The main
change was when we added assets. That happened in 2015
when we bought Con-way.
QBrokerage M&A activity is as robust as it’s ever been, and with the industry still fragmented, consolidation
is expected to continue. Are brokerages on XPO’s radar
screen?
AI love brokerage. It’s an important part of our service offering. Customers certainly value it, especially in the
kind of environment we’re in right now. I don’t know if it
makes more sense to build up that business through acquisitions or to continue to grow it organically. Either way,
we’ll continue to apply our technology to transform it for
our customers and carriers.
Q You have steered clear of parcel. Any itches to scratch in that area, or does it remain a non-starter?
AWe’re the number-one or number-two service pro- vider in each of our major lines of business. That’s an
important part of our strategy. I struggle to see a path to a
similar leadership position in parcel unless we bought UPS,
FedEx, or DHL, and none of them are for sale.
Q What has been the most profound change in the busi- ness—other than the growth of e-commerce—that you
see lasting for years, if not decades?
AArtificial intelligence. I believe we’re seeing a tiny sliver of how AI will be applied in our industry, particularly
in contract logistics. Our facilities are using predictive
analytics, collaborative robots, and a raft of other smart
technologies that leverage data. Down the road, AI is
going to help us better understand our customers’ customers. It’s going to force the whole industry to shed pre-
