Logistics XPO cuts staff to control costs

XPO Logistics Company adjusted personnel costs and cut unnecessary processes to compensate for the decrease in freight demand and increase profits.

XPO is a logistics company providing delivery services to diversified businesses such as Ford Motor, General Electric, and Caterpillar Inc. Recently, the company has faced a decline in shipments due to high inflation. They are concerned that an impending economic recession could lead consumers to be more cautious about spending, resulting in a decrease in shipment volumes.

Less than truckload (LTL) cargo transportation is XPO's largest revenue-generating segment. However, in Q1 2023, this segment only grew by 1.2%, equivalent to $1.12 billion.

"Regarding our workforce, we are planning a more rigorous restructuring to better suit the current environment and needs, while also reducing some staff to optimize costs," said XPO CEO Mario Harik.

Several other logistics giants, such as United Parcel Service and FedEx, also cited declining consumer demand as the reason for implementing cost control measures. This is how they navigate business when the economy enters an unpredictable phase.

XPO delivery trucks in the US. Photo: XPO Logistics

Wells Fargo market analyst Allison Poliniak-Cusic, a firm specializing in corporate financial solutions, said that weak freight infrastructure, cost-effectiveness, and ongoing investment remain obstacles for logistics businesses in general. For XPO specifically, the first-quarter loss in its European transport business largely stemmed from restructuring costs related to cost-cutting measures.

According to Refinitiv data, XPO's revenue is currently $1.91 billion, higher than the previous estimate of $1.87 billion. The company's stock also rose 5.4% to $46.82 in last week's trading session.

Cẩn Y (According to Reuters )

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