XPO to close warehouses following Amazon withdrawals
- XPO Logistics is closing warehouse locations in Aberdeen, Maryland; Edgerton, Kansas; and Rialto, California. Amazon was suspected to be the client in all three locations, according to Reuters.
- The closing of the Rialto location will result in 126 layoffs, according to The Press-Enterprise. XPO Logistics did not say how many layoffs were expected at other locations.
- "We had another significant development when our largest customer pulled back at least two thirds of their business and that's just a big development," XPO CEO Brad Jacobs said on the company's most recent earning's call. "And that there's no way that you can't bring guidance down when you lose $600 million of revenue on very short notice."
“We believe the shipper that is paring down its parcel injection, brokerage, last mile, and logistics activity with XPO is Amazon,” J.P. Morgan analyst Brian Ossenbeck told Reuters.
Amazon did not respond to a request to comment. XPO directed Supply Chain Dive to the company's earning's call.
"Well, in 2018 our top five customers represented about 11% of revenue," Jacobs said on the call. "The largest customer, however, represented roughly about 4%, 5% of that. Two-thirds of that business has gone away. So that's a body blow, no question about it."
Amazon, for the first time, listed as its competitors "companies that provide fulfillment and logistics services" in its annual filing with the Securities and Exchange Commission released in January. The filing, along with several recent announcements from the company, raises speculation the company wants to move many of its fulfillment and logistics services in-house.
Amazon has been investing in its logistics and freight hauling capabilities over the last few years. Last year, Morgan Stanley analysts said Amazon's investment in air cargo was a worrying sign for the likes of UPS and FedEx. Earlier this year, there were reports of Amazon beginning to make its way into ocean shipping. And the company's focus on last-mile is already well known.
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