XPO Logistics continues to grow in Q3, despite challenges

Connecticut-based XPO Logistics continued to sustain growth during its third quarter, with an operating income (EBIT) increase of 18 percent to US$209 million and net income increase of 62 percent to $115.2 million, compared to the same period last year. However, growth compared to the previous quarter has slowed considerably.

Year-over-year, revenue and net-income figures for Q3 of 2018 increased across all segments – excepts for a decrease in operating income in its logistics segment of 12 percent, from $67.3 to $59.5 million, due to the bankruptcy of a customer of 20 years, British department store House of Fraser.

The rate at which XPO is growing, while impressive compared to other industry members, is less robust than in quarters passed. For instance, in the second quarter of this year, the company saw a whopping 178 percent increase in net income. Still, in a market that is beginning to dampen, anything above marginal growth can be considered impressive.

CEO Bradley Jacobs said the positive results were largely to do with some technological investments beginning to pay off, adding that automation has helped the company secure 90 customer contracts in September alone. “And in North American brokerage, we used dynamic freight-matching algorithms to realize 18 percent revenue growth and 370 basis points of margin improvement with fewer people,” Jacobs said, referring to XPO Connect, its digital freight platform.

Given this positive growth, is XPO continuing its recent history of aggressive mergers and acquisitions? Looking forward, the company only said it is “continuing to explore acquisition opportunities that will further accelerate our trajectory.”