- Q3 2017 was XPO Logistics' best quarter to date, as revenue for the company's transportation segment — which includes the freight brokerage and last mile logistics business units — increased by $60 million YoY, COO Troy Cooper told Supply Chain Dive Wednesday.
- Truck brokerage was "off the charts," according to Cooper. While the business segment was already on track to beat expectations, he said it was "magnified" by the hurricanes in August, "but we're starting to see an uptick as we're getting closer to the peak."
- While truckers and trucking companies expected Hurricanes Harvey and Irma to hit their industry hard and drive up losses, they also expected the hurricanes to drive up rates — which benefits brokerage companies like XPO.
Trucking contract rates were bound to go up following Harvey and Irma — getting emergency supplies and construction materials down to Texas and Florida were a priority, so truck traffic increased, especially as flooded railways were unavailable.
As a result, freight forwarders and brokers are now raking in record-smashing quarterly results, and as peak season approaches, those earnings are only going to keep rising. As a case study, XPO expects to continue its strong growth through the holidays.
"Our revenue margins were very strong through September and that trend continued into October," Cooper told Supply Chain Dive. "Our global pipeline for contract logistics is near an all-time high at $1.7 billion."
If anything, the hurricanes helped push e-commerce growth: because truck traffic and rates increased so much, it enabled some 3PLs like XPO to invest more in their transportation infrastructure, which means their e-commerce clients will benefit come peak season and through 2018. At the same time, e-commerce is causing the entire freight and logistics industries to explode, so it's likely all of the expansion would have happened regardless.
"E-commerce is our largest vertical and helping us drive those numbers," Cooper said. "We opened eight new last mile hubs ahead of Black Friday. Our e-commerce network brings the total to 53, and we’re getting ahead expecting strong demand this season as more people are purchasing heavy goods online. We plan to have at least two more hubs by the end of the year and an additional 30 by the end of 2018."
This quarter was XPO's highest in terms of revenue, net income and net cash flow, which means the logistics company now joins the ranks of many other 3PLs, trucking companies and ports posting record-breaking numbers this year as a result of rising consumer demands. As companies enter peak season, that growth won't slow anytime soon.