XPO Logistics is one of the most advanced logistics companies in the world. It recently announced its plan to split into two. Farrah Salim, Sr. Principal Analyst at Gartner, spoke to The Logistics Point about the plan and what it will bring XPO’s customers.
What would be the wider implications for the logistics market from the decision?
XPO is already a leader in both the transportation and contract logistics market, but this split will allow them the opportunity to further hone and develop their strategy for each segment independently to drive greater value to customers. There are clear opportunities in both the transportation and contract logistics markets and this shift may help XPO to increase their customer base by offering more focused solutions to each market.
Why do you believe XPO has decided to do that and could it be attributed to the latest economic developments?
There were a lot of constraints on the logistics industry this year, especially with regards to transportation capacity. The current economic environment has put pressure on both markets to a degree we haven’t seen before. The demand for last-mile delivery services and for contract logistics has risen drastically this year, largely as a result of the rise of e-commerce and companies leveraging direct-to-consumer strategies. It’s not surprising therefore to see a logistic company like XPO make a strategic decision to focus more attention on these markets individually.
What are the expected changes to XPO customers?
Customers will most likely benefit from the split by gaining more focused attention and have access to differentiated service offerings that were perhaps not an option beforehand.
What are the areas XPO wants to improve by the spin-off?
The spin-off will allow them to focus more on each market and therefore better serve and grow their targeted customer segments within the two markets.
What are the problematic areas for XPO, and would a spin-off improve them?
From a capability and service standpoint, XPO is regarded very highly by shippers and is known for providing high quality service to their customers. Focusing on each segment separately may position them better to develop differentiated service offerings and grow the customer segments they choose to focus on.