XPO saw a 1% y/y tonnage increase in Q4, compared to mid to high-single-digit decreases in LTL peers. However, yield (excluding fuel surcharges) was only up 1% due to headwinds such as GRI and leaner yield profiles from large contract wins. CEO Mario Harik noted that they are not “sacrificing price to buy volume.”

XPO saw mid-single-digit-percentage increases in shipments from small, local shippers (higher-yielding accounts), but shipment weights were down similarly, impacting profitability. Length of the haul was down 1% y/y, while annual contracts renewed during the quarter were 7% higher. Targeting more freight from national players, XPO is now using a wide-net approach, including more freight on more oversized pallets, dock-to-dock, B2B, and local freight near terminals from smaller shippers. It is hoped that shipment weights from small shippers (more sensitive to broader economic inflections) will increase as the freight market improves in 2023.

XPO said Jan. tonnage was up y/y and forecasted Q1 revenue/hundredweight to have a similar y/y increase. CEO Harik expects the strategy to “pay dividends” as the macro recovers. XPO reported 98 cents/share adj. 4Q earnings, 14 cents better than consensus and 34 cents y/y. Adjusted OR in Q4 was 87.1% (vs. guidance of 120bps improvement), affected by winter weather and labor/maintenance expenses. Q1 2023 will report ORs in line with peers, excluding pension income and $20M in corporate expenses. All-in adjusted OR for Q4 was 90.3%, 86.8% for full-year 2022—long-term guidance of 600bps improvement by 2027, starting at 87.6% in 2021.

XPO’s LTL OR usually deteriorates ~50 bps Q4-Q1. Management expects better performance in Q1. We adjusted EBITDA in LTL forecast flat at ~$186M ($252M Q4, >$1B 2022). XPO shares were down 8.8% at 11:49 a.m. EST Thursday vs. S&P 500 up 0.1%.

XPO: “Not sacrificing price for volume.”

XPO saw a 1% y/y tonnage increase in Q4, compared to mid to high-single-digit decreases in LTL peers. However, yield (excluding fuel surcharges) was only up 1% due to headwinds such as GRI and leaner yield profiles from large contract wins. CEO Mario Harik noted that they are not “sacrificing price to buy volume.”

XPO saw mid-single-digit-percentage increases in shipments from small, local shippers (higher-yielding accounts), but shipment weights were down similarly, impacting profitability. Length of the haul was down 1% y/y, while annual contracts renewed during the quarter were 7% higher. Targeting more freight from national players, XPO is now using a wide-net approach, including more freight on more oversized pallets, dock-to-dock, B2B, and local freight near terminals from smaller shippers. It is hoped that shipment weights from small shippers (more sensitive to broader economic inflections) will increase as the freight market improves in 2023.

XPO said Jan. tonnage was up y/y and forecasted Q1 revenue/hundredweight to have a similar y/y increase. CEO Harik expects the strategy to “pay dividends” as the macro recovers. XPO reported 98 cents/share adj. 4Q earnings, 14 cents better than consensus and 34 cents y/y. Adjusted OR in Q4 was 87.1% (vs. guidance of 120bps improvement), affected by winter weather and labor/maintenance expenses. Q1 2023 will report ORs in line with peers, excluding pension income and $20M in corporate expenses. All-in adjusted OR for Q4 was 90.3%, 86.8% for full-year 2022—long-term guidance of 600bps improvement by 2027, starting at 87.6% in 2021.

XPO’s LTL OR usually deteriorates ~50 bps Q4-Q1. Management expects better performance in Q1. We adjusted EBITDA in LTL forecast flat at ~$186M ($252M Q4, >$1B 2022). XPO shares were down 8.8% at 11:49 a.m. EST Thursday vs. S&P 500 up 0.1%.

Sources: https://www.freightwaves.com/news/xpo-says-its-not-sacrificing-price-to-buy-volume#:~:text=%E2%80%9CWe’re%20not%20sacrificing%20price,in%20the%20’22%20fourth%20quarter.