XPO Logistics Cuts Staff to Control Costs

Logistics company XPO adjusts personnel costs, cuts unnecessary steps to compensate for reduced freight demand and increase profits.

XPO is a logistics company that provides delivery services to companies including Ford Motor, General Electric and Caterpillar Inc. The company has recently faced a decline in shipments due to high inflation. It fears that a looming recession could make consumers cautious about spending, leading to a decline in shipments.

Less than truckload (LTL) freight is XPO’s largest revenue segment, but it grew just 1.2% in the first quarter of 2023, or $1.12 billion.

"On the workforce side, we are planning to make tighter adjustments to the current environment and needs, and to cut some employees to optimize costs," said XPO CEO Mario Harik.

Other logistics giants such as United Parcel Service and FedEx have also cited the decline in consumer demand as a reason for their cost-control measures, a way to navigate the business as the economy enters an unpredictable period.

XPO transport trucks in the US. Photo: XPO logistics

Weak freight infrastructure, compliance costs and ongoing investment remain headwinds for logistics companies in general, said Allison Poliniak-Cusic, a market analyst at Wells Fargo, a firm that specializes in corporate finance solutions. For XPO in particular, the first-quarter loss in its European transportation business was largely due to restructuring costs related to cost-cutting actions.

XPO's revenue was $1.91 billion, up from the previous estimate of $1.87 billion, according to Refinitiv data. The company's shares also rose 5.4% to $46.82 in trading last week.

Can Y (According to Reuters )

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