XPO Logistics has announced the sale of its North American truckload business to Montreal-based TransForce Inc. for approximately $558 million in cash. This transaction marks a significant strategic realignment for XPO as it seeks to optimize its business structure, focus on core competencies, and reduce debt.
From Acquisition to Divestiture: The Evolution of XPO's Strategy
XPO originally entered the truckload business through its $3 billion acquisition of Con-way in October 2015. However, shifting market conditions and evolving corporate strategy led XPO to reassess the strategic value of this segment.
Strategic Rationale: Focus and Financial Optimization
Brad Jacobs, Chairman and CEO of XPO Logistics, explained that the primary motivation for selling the truckload business was debt reduction. While the operation performed well, ranking only 19th in the U.S. truckload market, XPO aims to maintain leadership positions in all its business segments. The company chose to concentrate on areas where it holds industry-leading positions to deliver greater value to customers.
Jacobs characterized the transaction as mutually beneficial: "TransForce gains an established organization with significant cross-border Mexico operations, while XPO strengthens its balance sheet, reduces annual capital expenditures, and improves its long-term growth profile."
Transaction Details: Assets and Operations
The divested truckload business includes approximately 3,000 tractors, 7,500 trailers, and 29 operating locations—all assets acquired through the Con-way purchase. In Q2 2016, the business generated $133.4 million in operating revenue and $16 million in net income.
XPO's Future: Asset-Light Model and Brokerage Network
Despite exiting the asset-based truckload business, XPO will continue serving North American customers through its extensive freight brokerage network—the second largest globally—which provides access to over 100,000 trucks daily through a network of 38,000 carriers.
Jacobs emphasized that the Con-way integration remains on track, with improved financial performance and customer satisfaction. The truckload divestiture represents an isolated decision regarding a non-strategic asset, while XPO remains fully committed to other acquired Con-way operations, particularly its less-than-truckload (LTL) business.
Market Response and Strategic Considerations
XPO had received acquisition offers for its truckload business shortly after the Con-way purchase. While initially opting to retain the operation for its synergy with brokerage services and cross-border capabilities, the company ultimately accepted TransForce's offer based on favorable pricing and strategic alignment.
"When we acquired Con-way, the truckload business came as part of the package—a respected operation with excellent employees, but lacking leading profit scale," Jacobs explained. "TransForce presented an offer that made compelling sense for all parties."
Cross-Border Operations: Maintaining Presence in Mexico
While divesting the truckload assets, XPO will continue participating in cross-border Mexico transportation through intermodal and expedited services. The company anticipates growing demand for these services amid nearshoring trends, leveraging its brokerage network and substantial contract logistics operations in Mexico.
TransForce's Strategic Expansion
For TransForce, the acquisition significantly strengthens its North American truckload position, particularly in U.S. domestic and cross-border Mexico markets. The purchase complements TransForce's existing operations, including its 2014 acquisition of Transport America.
Alain Bédard, TransForce's Chairman and CEO, stated: "We're acquiring a high-quality truckload business with a long history of strong operational and financial performance. We believe we're investing at an opportune time with capacity to benefit from future growth opportunities."
Analyst Perspective: A Win-Win Transaction
Industry analysts view the deal favorably for both parties. Cowen and Co. analyst Jason Seidl noted that while XPO's truckload business required substantial capital investment to achieve industry-leading scale, TransForce gains immediate scale in a fragmented market poised for recovery.
The transaction allows XPO to optimize its financial position while focusing on core operations, while TransForce expands its North American footprint—a strategic move that analysts suggest might precede broader corporate restructuring.