XPO Logistics raises $1.26 billion of equity
XPO Logistics has announced it has entered into definitive agreements with a group of global institutional investors to raise a total of $1.26 billion of equity. The company will receive all of the net proceeds and will use them to fund its ongoing growth strategy.
The group includes Ontario Teachers' Pension Plan, GIC which is Singapore's sovereign wealth fund, and Public Sector Pension Investment Board which collectively made an initial investment of $700 million in the company in September 2014. These three global investors each increased their holdings in XPO with the new private placement and were joined by 12 institutional investors, including sovereign and university endowment funds.
The company intends to use the net proceeds, together with cash on hand and the debt financing announced this morning, to fund its pending purchase of Norbert Dentressangle and for other unspecified acquisitions. There are no selling shareholders.
Bradley Jacobs, Chairman and Chief Executive Officer of XPO Logistics, said: "We're delighted to deepen our relationships with several of our largest shareholders and also welcome new blue chip investors to XPO. We appreciate this endorsement of our growth strategy, which is still in its early innings."
The transaction, which is complete and scheduled to settle this week, provides for the sale of newly issued common stock and preferred stock to the investors at a price of $45 per share of common stock on an as-converted basis. Upon approval by the company's shareholders the preferred stock will be converted into common stock. The stock issuance represents 28 million shares, or approximately 21 percent of XPO's common stock on a fully diluted basis, assuming conversion of the preferred stock. Morgan Stanley is serving as placement agent for the transaction.
The company also announced it has now completed its previously announced acquisition of Bridge Terminal Transport, one of the largest asset-light drayage providers in the United States. The acquisition adds approximately 1,300 independent owner-operators to the XPO network.
XPO Logistics is one of the largest and fastest-growing providers of transportation and logistics services in North America. The company is the second 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 expedite shipments, and a leading provider of highly engineered, technology-enabled contract logistics, with growing positions in managed transportation, global forwarding and less-than-truckload brokerage. XPO facilitates more than 42,000 deliveries a day through its service portfolio.
XPO has 229 locations and over 10,500 employees. Its two business units of transportation and logistics utilise relationships with ground, rail, sea and air carriers and other suppliers to serve over 16,000 customers in the manufacturing, retail, e-commerce, industrial, technology, aerospace, commercial, life sciences and governmental sectors. The company has more than 6,200 trucks under contract to its drayage, expedite and last mile subsidiaries, and has access to additional capacity through its relationships with over 32,000 other carriers. For more information, please visit: www.xpo.com.
FedEx is Reshaping Last Mile with Autonomous Vehicles
FedEx is embarking on an expanded test of autonomous, driver-less delivery vehicles to develop its last-mile logistics.
The US logistics firm piloted autonomous vehicles from Nuro in April this year, and the pair will now explore that further in a multi-year partnership. Cosimo Leipold, Nuro’s head of partnerships, said the collaboration "will enable innovative, industry-first product offerings that will better everyday life and help make communities safer and greener".
FedEx will explore a variety of on-road use cases for the autonomous fleet, including multi-stop and appointment-based deliveries, beyond the boundaries mass movement of goods from A-B. The logistics company says the exponential growth in ecommerce is spurring its experimentation in new autonomy solutions, both in-warehouse and on-road.
“FedEx was built on innovation, and it continues to be an integral part of our culture and business strategy,” said Rebecca Yeung, vice president, advanced technology and innovation, FedEx Corporation. “We are excited to collaborate with an industry leader like Nuro as we continue to explore the use of autonomous technologies within our operations.”
The changing role of couriers
Unlike structured delivery networks, operating under long-term partnerships and contracts, agility is where couriers deliver true value - and their ability to deftly solve last-mile fulfilment has most acutely been felt during the pandemic. For the billions of people around the world forced to stay at home to protect themselves and their communities from the spreading COVID-19 virus, couriers have been a constant. They may have been the only knock at the door some people experienced for weeks or months at a time.
But the last-mile has been uprooted by a boom in ecommerce, a shift that has been most apparent in the UK, US, China and Japan, according to the Global Parcel Delivery Market Insight Report 2021 by Apex Insight. These are markets with dominant economies and populations used to running their lives with a tap of a screen or double-click of a mouse.
“Getting last mile delivery right has long been a challenge for retailers,” says Kees Jacobs, Vice President, Consumer Goods and Retail at Capgemini. “In 2019, 97% of retail organisations felt their last-mile delivery models were not sustainable for full-scale implementation across all locations. Despite increasing demand from customers, companies were struggling to make the last mile profitable and efficient.”
Jacobs says that the pandemic alleviated some of these stresses in the short term. With no other option, consumers were understanding and tolerant, if not entirely happy, with longer delivery times and less transparent tracking. “But, as extremely high delivery demand continues to be normal, customers will expect brands to contract their delivery times,” he adds.
Last mile's role in ESG
Demand and volume weren’t the only things that have changed during the pandemic - businesses looked closer to home and as a result became more sustainable. Bricks and mortar stores were transformed from mini-showrooms to quasi-fulfilment centres. Online retailers and other businesses sought local solutions to ship more faster. In densely populated London, UK alone, Accenture found that delivery van emissions dropped by 17%, while Chicago, USA and Sydney, Australia saw similar emissions savings.