This sound is generated automatically. Let us know if you have any feedback.
Dive Brief:
- XPO will add 2,000 net port capacity to its network once it integrates the 28 former Yellow Corp. truck terminals. that it acquired in last year’s bankruptcy auction, CEO Mario Harik said during a fourth-quarter earnings call Wednesday.
- The carrier won about 3,000 doors in total, more than any other bidder at the auction. And while half of the facilities will expand the size of the company’s LTL real estate network, XPO will relocate operations to other smaller, existing locations nearby, Harik he said.
- XPO expects significant savings from the properties and will spend 2024 and 2025 reopening them, Chief Strategy Officer Ali Faghri told Trucking Dive in an interview. “We expect to have it all integrated into the network sometime in the next 12 to 18 months,” Faghri said.
Dive Insight:
XPO hopes the acquisitions will help it achieve its ideal target of 25% to 30% excess capacity, while positioning it to take on more business as cargo demand increases in the future.
“That would allow us to cope whenever that demand comes back,” Harrick said on the investor call.
But properties may need repairs or upgrades given the wear and tear from their previous owner. Once they are done, XPO will reopen the terminals in batches.
The first dozen or so will open in the next three to six months, with the next dozen in the next six to 12 months and then the last four or five after that, Harrick told investors.
Former Yellow terminals acquired by XPO
The carrier outspent its bankrupt rival in a real estate auction.
The CEO said he doesn’t expect the big property acquisition, financed by an $870 million loan, to weigh on the company’s operating ratio. The carrier achieved an adjusted LTL operating ratio of 86.4% in the fourth quarter, according to earnings report.
“The majority of service centers are in markets where we already operate,” Harrick said. “The carrying cost of real estate is quite low on a per-door basis, but we have the immediate benefit of the cost efficiencies and cost savings associated with having a larger facility to operate from.”