XPO Logistics announces GXO as name of logistics spin-off

Following a December 2020 announcement, in which it rolled out its plan to seek a spin-off of its logistics group as a standalone publicly traded company split it into two separate publicly-traded companies on the New York Stock Exchange—with one focused on global contract logistics and the other focused on less-than-truckload (LTL) and truck brokerage transportation services—Greenwich, Conn.-based XPO Logistics, a provider of global freight transportation and logistics services, said today it has officially re-named its logistics group as GXO Logistics.

At the time of the announced spin-off, the company gave its global contract logistics group the placeholder name NewCo, with the less-than-truckload (LTL) and truck brokerage transportation services group’s placeholder name XPORemainCo. It said, at that time, NewCo [GXO Logistics], would become the second-largest global contract logistics provider, with around 200 million square feet of warehouse space, upon completion of the spinoff, which an XPO official told LM will be complete in the second half of 2021.

“Today, we took an exciting step forward on our path to spinning off our logistics segment,” Brad Jacobs, chairman and chief executive officer of XPO Logistics said in a statement. “The new company is called GXO—three letters that stand for the game-changing opportunities we’re bringing to the table for customers, employees and shareholders, with a nod to our XPO heritage. GXO will take this legacy into the future as an independent public company, with countless ways to deliver logistics at full potential.”

XPO officials pointed to how, with years of technology-focused investments being a core principle of its growth trajectory, the new GXO will be able to leverage various aspects of what it called the logistics industry’s predominant secular tailwinds, including: the growth in e-commerce and omnichannel retail; fast-growing customer demand for automation and digital capabilities; and a shift toward outsourcing supply chain services.

“GXO will have an undiluted focus on its strategic priorities and blue-chip customer base, with a standalone equity currency to create long-term value for its stakeholders,” the company said.

GXO Logistics will be led by Malcolm Wilson, XPO, CEO, Europe, whom will serve as CEO. Wilson said that the new company’s brand identity captures the qualities that make XPO an industry leader, pointing to the company's ability to deliver faster, leaner, smarter logistics for customers at lower cost, using advanced automation and data science. 

XPO also said today that it filed an initial Form 10 registration statement confidentially with the Securities and Exchange Commission. The filing marks a significant milestone in the process of launching GXO as a publicly traded standalone company on the New York Stock Exchange, according to the company.

An XPO spokesman told LM late last year that there are various shipper benefits related to the proposed spin-off, with the management teams of XPORemainCo and NewCo [GXO Logistics] being solely focused on their respective companies’ strategic priorities and busines opportunities, making for what he called a much more targeted approach.

And related to that, he said that each company will have strong technology teams that will be focused on continuing to enhance their respective innovative services, which has been a longstanding focus for XPO Logistics since its inception in 2011.

In terms of service offerings for the respective companies, one of the main things that will be different will be the split out of XPO’s transportation and contract logistics groups into two separate pure play publicly-traded companies.

“From a customer standpoint, they will continue to come to us for LTL and truck brokerage, which are the two main pieces of our transportation business, and represent about 90% EBITDA for XPORemainCo,” he said. “And on the contract logistics side at [GXO] we will still have our global operations in North America and Europe.”

When asked about staffing levels for the new companies, with XPORemainCo at around 38,000 employees and 724 locations, and [GXO] at around 58,000 employees and 766 locations in 27 countries, the spokesman said staffing levels come down to how demand plays out.

“The reason for that—at [GXO]—is that we have a ton of e-commerce exposure, and that is really what we do from a financial perspective,” he said. “One of the trends that we are noticing, in terms of secular tailwinds, is that large customers are coming to us more and more for our expertise in contract logistics, and the pandemic really brought that to their attention, because they are seeing how crazy things can get and they really need more visibility into their supply chains. And they are coming to us because they know we have leading positions and critical expertise. The other secular tailwind is that we are seeing increased demand for supply chain automation, and with so much macro uncertainty, our customers are looking to do more with less and as they optimize their cost structure, they are also seeing the additional benefits within our warehouses, with our staff being practicing social distancing on both the forward and reverse logistics sides.”

What’s more, on the technology side, XPO said its plan is for (GXO) to have what it called a “perpetual license” for all of XPO’s software and technology that is has been building over the years, which would be purpose-built for its logistics business.