XPO Logistics reports 178 percent increase in net income in Q2

Today, XPO Logistics hosted its interim earnings call for the three months ended June 30 – reporting an overall net income increase of 178 percent to US$159 million, compared to the same period last year.

The company said second-quarter growth was led by continued “demand for e-commerce logistics globally, as well as by the consumer-packaged goods and technology sectors in North America and the fashion sector in Europe.”

All of its segments experienced growth in operating income. Its Logistics segment grew at the fastest rate, at 36 percent, year-over-year, to $67 million. Its Transportation segment pulled in $205 million, an increase of nearly 25 percent, y-o-y, while its North American LTL segment operating income increased 8 percent to $138 million, compared with Q2 2017.

The company said profitability of its last-mile services in North America and dedicated truckload and less-than-truckload (LTL) business in Europe were prominent drivers of growth. Still, customer returns associated with e-commerce were high for the quarter, which led to extra costs. XPO said it is continuing its efforts to reduce returns with the implementation of innovations like augmented reality to the consumer interface, in which the company has been investing throughout Q2 2018.

The company has also invested in digitalization during Q2, launching its cloud-based freight brokerage platform, XPO Connect, in April. The company’s introduction of the digital service is an attempt to capitalize on high demand for freight brokerage.

“The brokerage market is obviously hot,” CEO Brad Jacobs said, citing that the company has gone from “zero to 6,000 carriers on the platform” since its launch.

At this point, all XPO segments appear to remain unaffected by the trade war between the U.S., China and several other nations, which CEO Brad Jacobs said could remain a non-issue for members of the logistics industry, if tensions are resolved reasonably soon.