Transportation
Our Transportation segment provides transportation brokerage services to large
multi-national, medium-sized and small business customers where the Company
manages all aspects of the services offered including selecting qualified carriers/vessels,
negotiating rates, tracking shipments, billing and resolving disputes. Transportation
offers a comprehensive suite of services with the common goal of facilitating
the movement of goods using proprietary transportation management technology
and third-party carriers. Transportation includes our truck brokerage, intermodal,
last mile, expedited transportation and freight forwarding operations.
Truck Brokerage
Our XPO Logistics truck brokerage business is a non-asset business that places
shippers’ freight with qualified carriers, primarily trucking companies.
This freight is typically classified as truckload (“TL”) or less
than-truckload (“LTL”) shipments. Customers offer loads to us via
telephone, fax, email, electronic data interchange and the Internet on a daily
basis. The majority of these services are priced on a transactional or spot
market basis for both customers and carriers. In some cases, we contractually
agree to handle a significant portion of a customer’s freight at pre-determined
rates for specific origin and destination parameters. We collect payments from
our customers and pay the carriers for transporting customer loads.
Intermodal
Our XPO Logistics intermodal business is asset-light; it provides container
capacity, rail brokerage, local drayage (also called cartage), on-site operational
services and door-to-door shipment management. We contract with railroads to
provide the long-haul portion of the shipment of freight in containers, and
we contract with trucking companies for the local pick-up and delivery legs
of the intermodal freight movement. We also provide customized electronic tracking
and analysis of market prices and negotiated rail, truck and intermodal rates,
in order to determine the optimal transportation routes.
Last Mile
Our XPO Last Mile business is a leading non-asset provider of last mile logistics
in North America and the largest facilitator of last mile deliveries for heavy
goods. Last mile delivery comprises the final stage of the delivery from a local
distribution center or retail store to the end-consumer’s home or business.
This is a fast growing sector of transportation logistics that serves blue chip
retailers, e-commerce companies and smaller retailers with limited in-house
trucking capabilities.
Important aspects of last mile service are responsiveness to seasonal demand,
economies of scale, and an ability to maintain a consistently high quality of
customer experience. In addition, the last mile process often requires incremental
services, including pre-scheduled delivery times, unpacking, assembly, utility
connection, installation or removal of an old product. These additional services
are commonly referred to as white-glove services. We use our proprietary technology
platforms to collect customer feedback, monitor carrier performance, manage
capacity and communicate during narrow windows of service to ensure an end-consumer
experience that protects the brand equity of our customers.
Expedited Transportation
Our expedited transportation group is predominantly a non-asset based service
provider—substantially all of the transportation equipment used in its
operations is provided by independent owner-operators who own one piece of equipment,
or by independent owners of multiple pieces of equipment who employ multiple
drivers, commonly referred to as fleet owners. We are focused on developing
strong, long-term relationships with these fleet owners and incentivizing them
to furnish their capacity to us on an exclusive basis.
Our expedited transportation group operates as XPO Express, XPO NLM and XPO
Air Charter, and is the largest manager of expedited shipments in North America.
Expedited transportation services can be characterized as time-critical, time-sensitive
or high priority freight shipments, many of which have special handling needs.
These urgent needs typically arise due to tight supply chain tolerances, interruptions
or changes in the supply chain or the failure of another mode of transportation
within the supply chain.
Expedited shipments are predominantly direct transit movements offering door-to-door
service within tightly prescribed time parameters. Customers request our services
typically on a per-load transaction basis, with only a small percentage of loads
being scheduled for future delivery dates. We operate an ISO 9001:2008 certified
24-hour, seven-day-a-week call center that gives our customers on-demand communications
and status updates relating to their shipments.
Freight Forwarding
Our XPO Global Logistics freight forwarding business operates as a non-asset
based logistics provider for domestic and international shipments. We provide
time-critical, time-sensitive and cost-sensitive services for global freight
movements, domestic U.S. and cross-border North America movements, as well as
value-added and customized services such as asset retrieval.
XPO Global Logistics provides its services through a network of relationships
with ground, air and ocean carriers and a network of Company-owned and agent-owned
locations. Our freight forwarding capabilities are not restricted by size, weight,
mode or location, and therefore are potentially attractive to a wide market
base.
Our subsidiary, Ocean World Lines, Inc. (“OWL”), operates as a non-vessel
operating common carrier (“NVOCC”) and transports our customers’
freight by contracting with the actual vessel operator. We consolidate the freight
bound for a particular destination from a common shipping point, prepare required
shipping documents, arrange for any inland transportation, deliver the freight
to the vessel operator and arrange transportation to the final destination.
At the destination port, acting directly or through our agent, we deliver the
freight to the receivers of the goods, which may include customs clearance and
inland freight transportation to the final destination.
As a customs broker, we are licensed by the U.S. Customs and Border Protection
Service to act on behalf of importers in handling customs formalities and other
details critical to the importation of goods. We prepare and file formal documentation
required for clearance through customs agencies, obtain customs bonds, facilitate
the payment of import duties on behalf of the importer, arrange for the payment
of collect freight charges, assist with determining and obtaining the best commodity
classifications for shipments and assist with qualifying for duty drawback refunds.
We provide customs brokerage services to direct domestic importers in connection
with many of the shipments that we handle as an NVOCC, as well as shipments
arranged by other freight forwarders, NVOCCs or vessel operating common carriers.
Logistics
On September 2, 2014, the Company acquired New Breed Holding Company (“New
Breed”), a preeminent U.S. provider of asset-light based, complex, technology-enabled
contract logistics for large multi-national and medium-sized corporations and
government agencies.
New Breed’s customers primarily operate in industries with high-growth
outsourcing opportunities, such as technology, telecom, e-commerce, aerospace
and defense, medical equipment and select areas of manufacturing. These customers
have demanding requirements for quality standards, real-time data visibility,
customer service, handling of high-value products, high transaction volumes
with large numbers of SKUs, and/or time-assured deliveries.
With our acquisition of New Breed, we design, implement, operate and optimize
mission-critical outsourced supply chains for leading corporations. Through
New Breed’s supply chain technology and operational expertise, we offer
services solving complex supply chain challenges and create and implement transformative
solutions for customers, while reducing their operating costs and inventory
levels and improving their customer service. We believe that the combination
of New Breed’s information technology (“IT”) workforce with
our own—resulting in over 600 dedicated IT professionals focused on customer-facing
innovations—advances our competitive advantage across all our lines of
business.