In a significant strategic move, XPO Logistics has reached an agreement to sell its intermodal business to STG Logistics for approximately $710 million. This transaction marks a pivotal step in XPO's transformation into two separate, publicly traded companies focused on less-than-truckload (LTL) shipping and tech-driven freight brokerage services.
Strategic Rationale: Focus and Value Creation
The divestiture represents XPO's deliberate shift toward business simplification and capital structure optimization . By shedding non-core operations, the company aims to sharpen its competitive edge in LTL and brokerage segments while improving its credit profile toward investment-grade status.
"This spin-off simplifies our business model and brings our capital structure closer to investment grade," said XPO Chairman and CEO Brad Jacobs. "These are two priorities in our strategic plan to unlock greater value for stakeholders."
The intermodal unit, acquired through the 2014 purchase of Pacer International, generated $1.2 billion in revenue in 2021. Approximately 700 XPO employees will transition to STG Logistics as part of the deal.
STG Logistics' Expansion
Chicago-based STG Logistics, an asset-light provider specializing in complex supply chain solutions, plans to integrate the acquired business under the STG Intermodal brand. The combined operation will offer end-to-end container logistics services from port to final destination.
"We're combining STG's leadership in facility-based container logistics with XPO Intermodal's leadership in container transportation to create a platform with unparalleled capabilities," said STG CEO Paul Svindland, who previously helped operate Pacer before its acquisition by XPO.
The transaction will double STG's container fleet from 2,000 to 4,000 units, enhancing its ability to provide vertically integrated solutions with full shipment visibility and single-point accountability.
Industry Perspective
Industry analysts view the move as strategically sound. Ben Gordon, managing partner at Cambridge Capital, noted: "XPO is wisely simplifying its business to create pure-play entities and generate greater shareholder value. The eventual separation should result in a more focused team, leaner operations, clearer balance sheet, and ultimately a more valuable company."
This transaction follows XPO's 2021 spin-off of GXO Logistics, which demonstrated the value of focused business units. The company expects to complete its planned separation into two independent public companies by year-end.
Market Implications
The strategic shift positions XPO to become North America's third-largest LTL provider with a nationwide network, while creating a separate technology-driven brokerage business. This dual focus aims to capitalize on growing demand in both sectors while allowing each entity to pursue tailored growth strategies.
For STG Logistics, the acquisition significantly expands its intermodal capabilities, creating what company leadership describes as a "game-changing" platform in container logistics. The deal continues the ongoing consolidation trend in transportation and logistics, as companies seek scale and specialization in competitive market segments.