XPO Logistics announces its revenue rose to $831 million last year
XPO Logistics has announced financial results for the fourth quarter and full year 2014 which shows total gross revenue increased a staggering 223 percent year-over-year to $830.7 million, and net revenue increased 463.8 percent to $299.4 million.
This is largely due to recent acquisitions. Even so, the company has approximately $1.5 billion in available capital, including approximately $1.1 billion in cash, as well as undrawn capacity on its asset-backed loan facility.
Bradley Jacobs, Chairman and Chief Executive Officer of XPO Logistics, said: "The fourth quarter was our strongest performance yet, with higher than expected EBITDA of $42 million and revenue of $831 million. We built broad-based momentum across our operations; company-wide organic growth of 39 percent, significant strength in our truck brokerage and contract logistics businesses, and a sales force focused on cross-selling our capabilities in the fastest-growing areas of logistics. Our infrastructure, which we put in place to support a much larger organisation, is beginning to return significant operating leverage."
"We set high expectations for 2014 and we delivered. Now we're executing toward our 2015 targets of at least $5.25 billion of revenue run rate and $300 million of EBITDA run rate by year-end. We've opened two cold-starts in the last two months, and we recently completed our purchase of UX Specialised Logistics. We're primed to capitalise on our acquisition pipeline with $1.5 billion of fresh powder. We're ahead of plan, and we're still in the early stages of our growth."
The company provided the following financial targets for 2015:
- An annual revenue run rate of at least $5.25 billion by December 31;
- An annual EBITDA run rate of at least $300 million by December 31; and
- At least $1.5 billion of acquired historical annual revenue for the full year.
The company reaffirmed its financial targets for the full year 2017:
- Revenue of approximately $9.0 billion; and
- EBITDA of approximately $575 million.
The company's transportation segment, which includes truck brokerage, intermodal, last mile, expedited and freight forwarding, generated total gross revenue of $664.2 million for the quarter, a 158.2 percent increase from the same period in 2013.
The year-over-year increase in revenue was primarily due to the acquisitions of Pacer and ACL, and 39 percent organic revenue growth. Net revenue margin for the fourth quarter was 20.0 percent, compared with 20.6 percent in 2013. The decrease was primarily due to the acquisitions of Pacer freight forwarding and ACL last mile operations, both of which have lower margins than the company's legacy businesses.
Fourth quarter operating income improved to $10.7 million, compared with $3.1 million a year ago. The increase in operating income was largely due to improved performance by the company's truck brokerage and expedited businesses, and by the acquisitions of Pacer and NLM.
The company's logistics segment, which operates as New Breed Logistics, exceeded plan for the quarter, generating net revenue of $166.5 million and operating income of $13.1 million. Results were primarily driven by increased volume with retail customers. The acquisition of New Breed Logistics was completed on September 2, 2014.
XPO Logistics facilitates more than 37,000 deliveries a day as one of the fastest growing providers of transportation logistics services in North America. XPO is the third largest freight brokerage firm, the third largest provider of intermodal services, the largest provider of last mile logistics for heavy goods, the largest manager of expedited shipments, and a leading provider of highly engineered, technology-enabled contract logistics. It has 201 locations and over 10,000 employees.
For more information: www.xpo.com.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector