Introduction
XPO Logistics Inc. is one of the leading freight and logistics companies in the world, with operations spread across North America, Europe and Latin America. The company specializes in providing less-than-truckload and truck brokerage services. In recent years, XPO has expanded its operations across regional and national boundaries, and such growth has presented both opportunities and threats. XPO has also developed effective strategies to manage its international business operations. Technology has become an increasingly pivotal driver of XPO’s growth, competitiveness and performance in the global freight and logistics industry. This paper critically looks into XPO’s international business operations and processes, how technology has boosted the company’s competitiveness and performance and sustainability methods that the company has integrated into its long-term growth strategy.
Company Background
XPO Logistics Inc. is one of the largest freight transportation companies in the U.S. The company was founded in 1989, and it is headquartered in Connecticut, in the United States. Over the decades since its inception, XPO Logistics has grown into one of the leading freight transportation companies not only in the U.S but also globally. Currently, XPO Logistics has established its operations in 33 countries around the world. Moreover, XPO Logistics has continued to acquire other transport, logistics and freight companies as part of the strategies to grow its market share and bottom-line. These include companies such as Norbert Dentressangle, Con-way, Inc., and TransForce among others. These acquisitions have proved pivotal in expanding XPO’s footprint in the global freight and logistics market.
SWOT Analysis
Strengths
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Weaknesses
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Opportunities
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Threats
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Strengths
XPO has a successful track record of forming successful mergers and acquisitions, which not only gives the company access to new markets and talent but helps to diversify risk through portfolio diversification. Examples of XPO’s successful acquisitions include Norbert Dentressangle, East Coast Air Charter, Inc. and Interide Logistics LC. Additionally, XPO has built a reputation of high customer satisfaction, which enables the company to attract and retain more customers. XPO’s other notable strength is the adoption of innovative disruptive technologies. For instance, automation has enabled XPO to modernize its supply chain. The other key strength is strong brand recognition. Currently, XPO is ranked as the largest provider of last-mile logistics in the U.S (Globe Newswire, 2020).
Weaknesses
One of XPO’s major weaknesses is inadequate investment in research and development. The company’s investment in research and development is below the industry average and thus could impede XPO from competing with other leading players in the industry. The second major weakness is the inability to align its business model with the changing business and industry dynamics. The failure to align XPO’s organizational structure with the changing market landscape could limit its expansion into adjacent product segments. XPO’s other notable weaknesses include high employee attrition rates and unutilized space in some of the company’s product range.
Threats
The first major threat facing XPO is intense competition. The company is facing increasingly intense competition from other renowned freight companies including U.S. Xpress, C. H. Robinson, FedEx Supply Chain and Total Quality Logistics. The increased competition puts downward pressure on XPO’s sales and profitability. The other major threat facing XPO has increased vulnerability to liability claims. Operating in multiple countries with varying legal landscapes exposes XPO to costly liability claims. The other threats facing this company include changing labour laws and the shortage of skilled workforce in some global markets.
Opportunities
One of the valuable opportunities that XPO may tap into is expansion into new global markets. The company may leverage government free trade agreements to gain a foothold in new emerging markets in Europe, Asia and Latin America. The other key opportunity is technology. For instance, XPO can increase its sales and revenue by investing in new online sales channels. The other revolutionary technologies that can positively transform XPO’s performance and growth include predictive analytics, the Internet of Things as well as machine learning. Another valuable opportunity that XPO maybe tap into is research and development. XPO’s strong financial performance and cash flows allow the company to invest more resources in research and development to create new competitive advantages and keep up with the competition. In the words of Asim and Sorooshian (2019) research and development foster innovation and creates new capabilities that give a company a competitive edge over rivals.
Role of Technology in XPO’s International Operations and Processes
With operations in 33 countries globally, XPO has developed effective strategies for managing its international operations and processes. Technology has increasingly evolved into a valuable source of competitive advantage and a key driver of success in the global freight and logistics industry. In the words of Perego et al. (2011), technology enables freight and logistics companies to create and extract the most value from their supply chains through efficient digital supply chain management. The ongoing Covid-19 pandemic has accelerated the adoption of disruptive technologies in the freight and logistics industry.
One of the technological innovations employed by XPO to enhance its international logistics and freight operations and processes is XPO Connect. “XPO Connect is a multimodal, digital freight platform that provides virtual access to XPO’s range of transportation services. The technology uses machine learning to continually update information helping shippers and carriers buy and sell capacity” (XPO Logistics, 2021). It is a transportation technology platform that enables shippers and carriers to create real-time end-to-end shipment visibility and tracking of their freight from pickup to the final delivery. With XPO Connect, shippers and carriers gain easy virtual access to XPO’s wide range of transportation services. Notably, this platform uses machine learning to continually improve shippers’ and carriers’ operational capacity. Moreover, XPO Connect provides shippers and carriers with daily alerts issued by infrastructure sources, municipalities, airports, states as well as countries and more. This multimodal digital freight platform has enabled XPO that uses self-learning and predictive analytics to increase connectivity within its vast and complex transportation networks.
XPO has also deployed machine capabilities in an effort to optimize its international supply chain operations and processes. As the global logistics and freight industry becomes increasingly competitive and dynamic, it has become imperative for companies to satisfactorily and cost-efficiently meet shippers’ demand for speed and agility (XPO Logistics, 2021). XPO leverages artificial intelligence and machine learning technologies to analyze consumer demand, and predict inventory for customers. Machine learning has enabled XPO to develop XPO Smart, a suite of applications
Artificial intelligence (AI) is the other revolutionary technology that continues to positively transform XPO’s logistics operations and performance in the global market. The integration of AI continues to transform XPO’s operations and processes in proprietary warehouse management systems. Warehousing is a critical component of export and import operations, as it facilitates the movement of goods across borders. As part of the strategies to improve its efficiency and performance, XPO has integrated cloud computing into its warehouse management systems. For instance, the company deploys 5,000 collaborative autonomous warehouse robots to improve operations and material handling productivity, reduce errors and customer satisfaction (XPO Logistics, 2018). These robotics work alongside humans to optimize warehouse operations. The deployment of autonomous robots and other AI-driven warehouse solutions has significantly improved productivity, speed and safety.
AI-driven warehouse tools have the potential to complement work performed by employees and handle consumer demand with near-perfect accuracy. Notably, the synergies created by the combination of employees and robotics have given XPO valuable competitive advantages over its competitors. Moreover, XPO is planning to introduce AI-driven demand-based pricing systems and AI-based load-building tools as part of the strategies to build new supply chain capabilities and competitive advantages. If well-implemented and managed, these new technologies have the potential to remarkably transform XPO’s freight transportation operations.
Conclusion
In a nutshell, XPO has established itself as a competitive player in the global freight and logistics industry. XPO has made sustainability an integral part of its long-term growth strategy and plans. XPO’s approach and commitment to sustainability are firmly rooted in the company’s corporate values: safety, inclusivity, entrepreneurship, innovativeness and respect. For instance, the company has developed an Environmental, Social and Governance (ESG) scorecard that guides its sustainability efforts and projects. In 2021, XPO was recognized by the Inbound Logistics magazine as a Green 75 Supply Chain Partner (Inbound Logistics, 2021). This ESG scorecard provides XPO with a progressive means of evaluating its sustainability initiatives. Such recognition signifies XPO’s commitment to sustainability.
Additionally, XPO has joined the Lean and Green program, a European initiative that fosters collaboration in logistics and guides its partners to reduce their ecological footprint and work towards a more sustainable future. The company is making ongoing investments to eliminate waste in its global operations, particularly in areas such as warehousing, vehicle emissions and empty miles. XPO is also planning to integrate alternative fuel vehicles in its global fleet as part of the sustainability strategies for reducing greenhouse gas emissions. The company’s increased commitment to sustainability has the potential to foster its competitiveness and performance, especially given the increasing demand for sustainable goods.
References
Asim, Z., & Sorooshian, S. (2019). Exploring the role of knowledge, innovation and technology management (KNIT) capabilities that influence research and development. Journal of Open Innovation: Technology, Market, and Complexity, 5(2), 21.
Globe Newswire, (2020). XPO Logistics Manages COVID-19 Surge in Last Mile Demand with New XPO Connect Capabilities. Retrieved from https://www.globenewswire.com/news-release/2020/08/05/2073137/0/en/XPO-Logistics-Manages-COVID-19-Surge-in-Last-Mile-Demand-with-New-XPO-Connect-Capabilities.html#:~:text=XPO%20is%20the%20largest%20provider,retailers%20and%20e%2Dcommerce%20companies.
Inbound Logistics (2021). G75: Inbound Logistics’ 75 Green Supply Chain Partners. Retrieved from https://www.inboundlogistics.com/cms/article/g75-inbound-logistics-75-green-supply-chain-partners/
Perego, A., Perotti, S., & Mangiaracina, R. (2011). ICT for logistics and freight transportation: a literature review and research agenda. International Journal of Physical Distribution & Logistics Management.
XPO Logistics (2018). XPO Logistics to Deploy 5,000 Collaborative Warehouse Robots in North America and Europe. Retrieved from https://news.xpo.com/1831/xpo-to-deploy-5000-collaborative-warehouse-robots-in-north-america-and-europe/
XPO Logistics (2020). 2020 Sustainability Report. Retrieved from https://xpodotcom.azureedge.net/xpo/files/s18/2020_XPO_Sustainability_Report_-_0423.pdf
XPO Logistics (2020). XPO Logistics adds COVID-19 Dashboard to XPO Connect. Retrieved from https://news.xpo.com/2402/xpo-logistics-adds-covid19-dashboard-to-xpo-connect/
XPO Logistics (2021). Proprietary freight management technology that makes every shipment more efficient. Retrieved from https://www.xpo.com/technology/
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