Logistics company XPO adjusted personnel costs and cut unnecessary steps to compensate for reduced freight demand and increase profits.
XPO is a logistics company that provides delivery services to companies including Ford Motor, General Electric and Caterpillar Inc. The company has recently faced a decline in shipments due to high inflation. It is concerned that the looming recession could make consumers cautious about spending, leading to a decline in shipments.
Less than truckload (LTL) freight is XPO’s largest revenue segment, but it grew just 1.2% in the first quarter of 2023, or $1.12 billion.
"On the workforce side, we are planning to make tighter adjustments to the current environment and needs, and to cut some employees to optimize costs," said XPO CEO Mario Harik.
Other logistics giants such as United Parcel Service and FedEx have also cited falling consumer demand as a reason for their cost-control measures, a way to navigate business as the economy enters an uncertain period.
XPO transport trucks in the US. Photo: XPO logistics
Weak freight infrastructure, compliance costs and ongoing investment remain headwinds for logistics companies in general, said Allison Poliniak-Cusic, a Wells Fargo analyst who specializes in corporate finance solutions. For XPO, the first-quarter loss in its European transportation business was largely due to restructuring costs related to cost-cutting actions.
XPO reported revenue of $1.91 billion, up from the $1.87 billion estimate, according to Refinitiv data. Shares of the company also rose 5.4% to $46.82 in trading last week.
Can Y (According to Reuters )
Source link
Comment (0)