Thursday, November 8, 2012

XPO Logistics - Insane Growth?

I just read a great article on XPO logistics which is growing their brokerage business very dramatically. I have been close to this company since it was just Express-1 and the leadership had the foresight to see the potential growth in brokerage.  They started this business at exactly the right time and now it is the fastest growing part of the business.

As you can see from the graph below (Source: Seeking Alpha) the revenues from brokerage are really taking off.  The other key point I draw from this graph is they have a really nice mix of business.

XPO Logistics
I think this is a company to watch very closely and it is at a major point.  They clearly have shown they have the capability to bring in acquisitions and grow the revenue.  Like most companies in a major growth period they are losing money but I do believe in the leadership and the strategy of the company.  

As a shipper, I have always loved doing business with companies in this sweet spot.  Big enough to do what I need them to do, they are willing to invest and yet they are small enough that you are a big player in their portfolio.  You generally get much better attention and you have the ability to be a core customer regardless of size. 

I could be wrong but I had the same feeling about Coyote Logistics when it was much smaller and so my intuition tends to be pretty good on these things.  Watch XPO.

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