XPO Logistics Expects 750,000 European “Last Mile” Home Deliveries in 2018

XPO Logistics Inc has announced it expects to make or manage 750,000 “last-mile” home deliveries to homes in Europe for 2018, as the U.S.-based company dips its toe into a crowded and fast-growing market.

The Greenwich, Connecticut-based delivery and warehousing company is the largest provider of “last-mile” deliveries from warehouses direct to homes in North America, handling or managing some 13 million drop-offs in 2017.

Last week XPO said it was taking that service to Europe, but did not disclose expected volume.

Today the company told Reuters its projected volume ahead of the announcement on the expanded service.

“That’s more volume than people would have expected in year one,” said Stephens Inc analyst Jack Atkins. “I don’t think it’s material for the profitability of the company, but it’s a nice start.”

In a recent interview with Jeff Berman,  group news editor for Logistics Management magazine, XPO Chairman and CEO Brad Jacobs said that XPO’s last mile business continues to see significant growth with the company’s fourth-quarter 2017 earnings from that segment growing 21.3% annually, with that growth stemming from customer demand.

“That was the fastest-growing quarter we had for the last mile for all of 2017, and it was powered by our ecommerce network and a strong peak season, especially from our ecommerce customers, last mile is buoyant, and we are right at the forefront of that.”

Troy Cooper, the chief operating officer of XPO Logistics, said, “Our last mile expansion to Europe is being driven by customer demand, primarily related to ecommerce. Consumers are buying more large items online, including furniture and appliances. These are home deliveries that often require white glove services, such as assembly, installation, and testing. We’ll leverage our proprietary technology and successful business model that have made us the last mile leader in North America.”

Luis Gomez, managing director of transport, XPO Logistics Europe, said, “Today, the market is very fragmented with small-scale regional players. XPO has the scale and experience to look across Europe and give customers results-driven performance as they grow with the boom in ecommerce.”

XPO previously announced plans to open 30 new last mile hubs in North America by the end of 2018 for a total of 85 hubs in the United States. The company is the largest last mile logistics provider for heavy goods in North America, facilitating approximately 13 million deliveries a year.

XPO has used rapid-fire acquisitions to grow from a $175 million truck brokerage company in 2012 to a $15.38 billion freight and logistics behemoth, but its European expansion, for now, is being built organically.

In Europe, XPO hopes to capture a bigger slice of a deeply fragmented market where similar to U.S. trends, consumers are increasingly demanding delivery of unwieldy or intricate products they buy online or in stores, ranging from refrigerators to servers for data centers.

Seko Logistics, which competes with XPO in the United States on deliveries of large and bulky items, is also expanding its home delivery business in Europe for products that require extra installation like medical devices or golf simulation machines.

“The logistics opportunity is immense across Europe, in the multi-multi billion-dollar range,” said SEKO Logistics spokesman Brian Bourke.

XPO declined to name any new customers or quantify investments in new hubs, trucks, and employees. It already counts Swedish furniture brand IKEA and Zara, Inditex SA’s clothes retailer, as customers, and has been building its delivery network of trucking contractors on the continent.

The expansion comes after XPO began testing its direct-to-household service in the United Kingdom, Ireland, and the Netherlands in 2016, and has moved to Spain and France.

Related: Speed and Service is Driving Ecommerce Growth to Asia Pacific

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