XPO Logistics is hot on the acquisition trail as faithful investors ignore the losses

08/06/2015

While many freight forwarders around the globe are clutching at straws, with poor attempts at managing capital structures that are either overstretched or inefficient, XPO Logistics is leading the way in the M&A field – its results are impressive, to put it mildly.

This US group ...

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John Roberts
June 29, 2015 at 2:32 pm
I read somewhere that the CEO is expecting the new combined buying power of XPO/ND to be the way they make money in future which seems a bit naive to me. Although there are obvious benefits to being bigger, with air and sea rates at their lowest for years I don’t know what huge savings are available any more to a bigger group. There’s no point promising large volumes to shipping lines to agree long term rates when the prices are already rock bottom and any average Joe can get a cheaper spot rate.

And I think the comparison to Salesforce is misleading. You can’t roll out logistics like you can do with software. For logistics, you need more staff, warehouses, expensive vehicles, equipment, etc. For software, you just need to install it.
I’m no expert but the numbers don’t add up for me. You can’t pay over the odds in logistics and expect to get away with it forever, the margins just aren’t there to cover it.
And based on the stock charts, it looks like the XPO share price turned the corner and is now heading in the wrong direction.

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- Bruno
  August 06, 2015 at 10:41 am
  John, XPO is in a different market than sea/air to which you are referring.
  Global freight is a very small part, even in the combined group.
  XPO is mainly about road transport and warehousing & distribution.
  What they call “freight brokerage” is about using their buying power of ROAD transport.
  They buy spot vehicle capacity from smaller outfits in a very efficient way.
  A bit like booking.com allows you to book a room, they offer road transport capacity.
  You buy in a very fragmented market a service that is much less commoditised when compared to a container shipping from two well served ports, using one of 4 seacarrier groups.
  ND has 8000 trucks in Europe and combining them with the US experience in brokerage is indeed rolling out a capability highly supported by systems.
  You talk about air & sea but what you read is about road..
  kind regards
  
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