Earlier today, global freight and logistics services provider XPO Logistics said it has rolled out four new technology efforts that serve as the “core” of its LTL (less-than-truckload) 2.0 optimization plan.
XPO is currently the second-largest provider of LTL services in North America. In its third quarter earnings announcement last week, it said that it reported its best third quarter LTL operating ratio in 30 years, adding that it expects to generate roughly $100 million in incremental operating profit over the next two years from its proprietary technology offerings within LTL 2.0.
“Our technology is spurring growth across all the services we offer,” said Mario Harik, chief information officer of XPO Logistics, in a statement. “We’ve pinpointed four high-impact areas where we can lead the LTL industry in transforming traditional approaches to serving customers. Two of these innovations – dynamic route optimization and linehaul bypass – are already in pilot. Given our capacity for innovation, our opportunity for creating value in LTL is nearly limitless.”
The four chief components of XPO’s LTL 2.0 offerings include:
On the company’s third quarter earnings call last week, Scott Malat, XPO’s outgoing chief strategy officer, noted that XPO still has plenty of runway to optimize its LTL network, noting that XPO recently launched phase one of its linehaul bypass model.
“This creates truckloads dedicated to direct freight shipments,” said Malat. “Instead of having the truck, stop at multiple service centers. So far, this change has shown an approximate 2.4% increase indirect loads.”
XPO Chairman and CEO Brad Jacobs said on the call that these four categories of LTL technology innovations are important drivers to the XPO business on a long-term basis.
For the third quarter, XPO’s North American less-than-truckload (LTL) net revenue was up 5.4% at $981.7 million, with the adjusted operating ratio for the segment at 85.4%, for an improvement of 220 basis points.