XPO Logistics rolls out leadership transition plan to take effect after planned spin-off

Following the issuing of strong second quarter earnings results yesterday, Greenwich, Conn.-based freight transportation services provider XPO Logistics rolled out its leadership succession plan, which is set to take place upon completion of the company’s fourth quarter spin-off of its truck brokerage and asset-light transportation units into a new company, RXO.

XPO said that Brad Jacobs, Chairman and CEO, will transition to Executive Chairman, as well as Non-Executive Chairman of the spin-off, with acting LTL President and Chief Information Officer Mario Harik will assume the role of XPO CEO, which, at that point, will be a pureplay LTL carrier through the completion of the spin-off and the divestiture of its European business.

“Under Mario’s leadership, we’ve made major advances in transforming our LTL business, as demonstrated by the strong second quarter results we announced today,” said Jacobs in a statement. “Since taking over LTL last fall, Mario has driven marked improvements in operating ratio, pricing and network fluidity, as well as customer satisfaction and employee engagement. Mario has been key to XPO’s success since our earliest days, working side-by-side with me to build the company into an industry leader and innovation powerhouse. He has a deep understanding of our business, and he’s the architect of our industry-best technology platform. I’m confident that we’ll have a seamless transition from Mario’s current role as LTL president to his leadership of XPO as a standalone LTL company.”

Harik was one of the first employees hired by Jacobs, when he established XPO in 2011, with a company spokesperson saying that alongside Jacobs, he led the vision for building XPO as a transportation powerhouse steeped in technology and was instrumental in developing the proprietary tech and innovation, which she said provides XPO with its competitive advantage.

What’s more, over the nine months during which Harik has led XPO’s North American LTL business, Harik has led all the major initiatives to transform XPO’s business, which has seen improvements on various fronts, including: operating ratio; network fluidity; customer satisfaction; and employee engagement. And the spokesperson added that Harik has laid down the groundwork for how technology will transform the LTL sector through pricing, piece-level tracking, productivity, and network efficiency.

“The opportunity ahead for XPO is enormous,” said Harik in a statement. “We have a high-ROIC LTL business in an industry with substantial barriers to entry, durable end-market demand, secular tailwinds and strong pricing dynamics. Our network has a robust technological infrastructure and a highly engaged team with many long-standing customer relationships. In the seven years that we’ve owned the business, we’ve improved our adjusted operating ratio dramatically—now, our new growth strategy has created fresh momentum. I’m excited to continue working with Brad and the team to create a world-class LTL carrier.”

XPO Chief Investment Relations Officer Tavio Headley told LM that XPO’s initiatives in LTL are going very well.

“In June, we hired the most net new drivers in a single month since July 2021,” he said. “In the second quarter, we also maintained our highest levels of network fluidity since 2020. If you look at our service levels, going back from now to the end of last year, you are seeing significant improvement. For example, our on-time performance improved year-over-year by 27%. Our charged damage frequency improved 48% year-over-year, and our sales team delivered an all-time record for new business won.”

Looking ahead to the remainder of 2022 and into 2023, Headley said that XPO is now in phase two of its LTL plan, with what he called a very long runway for increasing XPO’s yield to close the pricing gap.

“We are going to generate more tonnage as we are adding capacity to handle that tonnage,” he said. “And we will benefit from our tech-enabled productivity; you can see that with our piece-level tracking, where customers can benefit from granular visibility into multipiece shipments. We also have tech initiatives that have to do with the linehaul, as well as optimizing our pickup and delivery and our dock productivity.”