GXO Logistics sets its sights on Asia-Pacific market in 2027

Photo: GXO Logistics

GXO Logistics is likely to head to the Asia-Pacific region in search of new acquisition opportunities next year.

In an exclusive interview with The Loadstar, during a visit to London last week, GXO CEO Patrick Kelleher said the world’s largest pure-play contract logistics operator was drawing up expansion plans for the region, which has historically seen far lower levels of investment interest from the company compared with Europe and North America.

“It’s not that we shied away from Asia, I just don’t think we turned our eye to that strong growth yet, and I think we have a big opportunity to grow.

“But I see that happening in 2027, and I’ve messaged that to the investment community; It’ll be via organic and M&A in 2027 and beyond,” he added.

Its current portfolio in Asia is tiny in comparison with North America and Europe.

“Our business in Asia right now is small, less than 1% of global revenue. Today we’re in Thailand, Malaysia, Singapore; we have out toe in the water in Australia, and I would see us continuing to play in those countries’ aerospace and defence strategy industries,” he said.

Following last year’s takeover of UK contract logistics operator Wincanton, the majority of GXO’s revenues, some 70%, are earned in Europe, with the remainder in North America.

The integration of Wincanton is expected to be completed by the end of this year, although it still has to undertake the divestiture of its grocery business – as per the competition regulator’s requirements – but Mr Kelleher was unable to offer a schedule on any deal.

“It’s a healthy process and we’ll bring it to a successful conclusion,” he said. “The integration overall continues to progress really well and by the end of the year we will have achieved the $60m synergies that we put forward.

“We’re Integrating on both the back-office perspective and sales – the teams are one sales team going to market,” he added, admitting that during the takeover process of Wincanton – marked by a bidding war between GXO and CMA CGM-backed Ceva – and the subsequent two-phase Competition and Markets Authority (CMA) investigation had been destabilising for Wincanton.

“I think that the notable thing now is our pipeline is coming back.

“I think when there were the headwinds during the CMA process, customers were reluctant to pick Wincanton as one of their bidders, not knowing really what the future would hold until the CMA process was done, and now we’re really seeing the pipeline come back,” he said.

However, in terms of the company’s renewed focus on organic growth, it is likely to be North America which will occupy most of Mr Kelleher’s time this year.

“We’re very focused on accelerating growth in North America. We have underperformed in North America relative to our competitors and to the growth of the market – I think maybe the focus on M&A and the integration that was happening… doubling the size of the business through M&A since the spin-out, it meant a lot of focus on integration and declining focus on organic growth, as evidenced by organic growth performance.

“I think that came at the expense of organic growth performance in North America, of which we’re quickly right-sizing – we deserve to win more in North America,” he added.

“It is time for us to play harder for organic growth, which means getting into the RFQs a lot more and proactively bringing solutions,” he concluded.