XPO Logistics, a global leader in transportation and logistics services, has announced the sale of its North American truckload business to Canada's TransForce Inc. for approximately $558 million. This strategic move marks a significant shift in XPO's operational focus and business priorities.
Strategic Realignment: Focusing on Core Competencies
The divested truckload operation, originally acquired as part of XPO's $3 billion purchase of Con-way in 2015, includes approximately 3,000 tractors, 7,500 trailers, and 29 operating locations. Despite generating $133.4 million in operating revenue and $16 million in net income during Q2 2022, XPO determined the business no longer aligned with its long-term strategy.
"This transaction enables us to strengthen our balance sheet while sharpening our focus on businesses where we have a clear path to market leadership," stated Brad Jacobs, XPO Chairman and CEO. The truckload division ranked just 19th in the U.S. market, contrasting with XPO's leading positions in less-than-truckload (LTL) and freight brokerage segments.
Transaction Details and Rationale
Proceeds from the sale will primarily service corporate debt, reducing XPO's leverage ratio while decreasing annual capital expenditures. The company emphasized it will continue offering truckload services through its extensive freight brokerage network, which maintains relationships with over 38,000 carriers.
Jacobs noted the truckload operation represented just 3% of XPO's total shipments, with the company continuing to facilitate over 150,000 daily freight movements through its non-asset brokerage platform. "Our customers recognize we maintain tremendous capacity through our asset-light model," he added.
Market Positioning and Future Strategy
XPO will concentrate resources on two primary growth areas:
- Freight Brokerage: Leveraging its position as North America's largest provider, offering dry van, refrigerated, and specialized equipment services
- LTL Operations: Building on its status as the industry's second-largest less-than-truckload carrier through operational improvements
The company also reaffirmed its commitment to cross-border services between the U.S. and Mexico, particularly in expedited and intermodal solutions, where it maintains substantial contract logistics operations on both sides of the border.
TransForce's Strategic Acquisition
For TransForce, the purchase complements its 2014 acquisition of Transport America and significantly expands its U.S. market presence. Alain Bédard, TransForce CEO, highlighted the transaction's strategic value: "This establishes meaningful scale in domestic and cross-border truckload markets while adding premium customers to our portfolio."
Industry Analysis and Outlook
Market analysts view the transaction as mutually beneficial. Cowen and Co. noted XPO's truckload business required substantial capital to achieve top-tier status in the fragmented TL sector, while TransForce gains immediate scale ahead of an anticipated 2023 market recovery.
XPO's strategic pivot reflects broader industry trends toward asset-light models and service specialization. The company maintains its leadership in high-margin segments while optimizing its balance sheet—a calculated response to evolving market dynamics in the logistics sector.