Q&A: XPO Logistics Chief Strategy Officer Matt Fassler
In early August, the long-awaited spin-off of GXO Logistics from Greenwich, Conn.-based freight transportation services provider XPO Logistics was made official. This move was originally announced by XPO in December 2020, when XPO introduced its plan to seek a spin-off of its logistics group as a standalone publicly traded company split it into two separate publicly-traded companies on the New York Stock Exchange–with one focused on global contract logistics [GXO Logistics] and the other focused on less-than-truckload (LTL) and truck brokerage transportation services [XPO Logistics].Since that time, it has been business as usual for XPO Logistics, as it continues to finetune its strategy as a standalone company and expand its reach and share in markets it competes in.XPO Chief Strategy Officer Matt Fassler provided LM Group News Editor Jeff Berman with a detailed overview of how XPO views the LTL and brokerage markets, as well as a look at the 2021 Peak Season, among other topics. Their conversation follows below.LM: How do you view the current state of the LTL market, in terms of the tailwinds driving it, at the moment?Fassler: As you know, we are one of the largest and most profitable LTL players in the U.S.
We think LTL is benefiting from a few different transcendent tailwinds. One of them, of course, and this is really driving our entire business and you’ve seen it and read that in so many different contexts, for the industry, is the outsourcing of transportation broadly. In a tight market visibility through technology helped to drive our business, and that is true in brokerage and it is true in LTL.LTL deals more so with the industrial economy than with the consumer economy, and the consumer piece is growing within LTL.
And the industrial economy is recovering. It was sluggish for a while, really, even before Covid. With Covid, the industrial shutdown was more dramatic than the consumer shutdown.
The industrial economy slowed down, and it has now been revving up, which is also a good thing for XPO LTL and will continue to be, I think, into next year. I think the recovery in the industrial economy really has legs. Also, LTL is increasingly touching e-commerce. Consumers expect fast delivery, supply chains are getting compressed, and demand is rising for LTL capacity.
We are staging smaller quantities of goods closer and closer to the consumer [to help meet that demand].LM: What is XPO’s technology strategy as it relates to LTL?Fassler: Within LTL and across the company, really, a lot of our most compelling efforts are in technology. We are driving innovation in pricing and are highly focused on bringing more value to our customers and really optimizing the network qualitatively and efficiency-wise. And we want to balance, of course, our financial interests with our customers’ desire and need for a high level of service and our need for our network to flow well, and a lot of that gets determined by how we price our services.Secondly, we are using tech to drive optimal network efficiency.
We use automated load building tools to improve trailer utilization, as example of that as we continue to optimize our line haul models. Another example is our usage of dynamic routing to optimize our pickup and delivery capability, which gives our dispatchers and our drivers real-time digital visibilityThose are really important efforts for us in LTL, and they have substantial room to go from here. We have great visibility into where loads are, where the truck is moving, and the route it is taking.
With dynamic routing, the routing can, if needed, change midstream, and it can account for weather and for traffic and to a change in the order book for the day. Sometimes you learn about a pickup when a driver is already out on the road. If he is doing it off a sheet of paper that was drawn up last night, it is kind of tough luck.But if a driver is working with dynamic routing capability through a dispatcher who is wired in and very nimble and agile, then we can be nimble and agile and adopt on the fly and service our customers picking up and delivering their freight in a way that is integrated seamlessly into the movement of the network.LM: The LTL market is seeing more consumer activity accelerated by Covid.
What has that been like, in terms of handling more consumer-oriented freight from a network operations perspective?Fassler: The characteristics of consumer freight and the move towards e-commerce have been clear and present for some time, however, everything related to e-commerce has been accelerated due to the pandemic.The emergence of more e-commerce options for CPG, for example, is something that changed and definitely took a step forward during the pandemic. And consumer spending has been quite strong, so there have been multiple years of supply chain evolution that have been fast-forwarded as a result of the pandemic and move towards e-commerce.And the good news is we were focused on that opportunity beforehand. It is really a question of pacing and the speed at which that evolution developed, and we have been tuned into it and, thankfully, been able to make the most of it. LM: Shifting to the brokerage side of your business, what is your approach to scale and capacity amid a tight market?Fassler: Right now, a great broker brings a lot of value to a shipper and a carrier.
For us, what makes us great are really two things–our people and our tech. Our tech is really all about XPO Connect.We have a digital freight marketplace built from scratch, and we built it with scale in mind. It is proprietary, fully-automated, and self-learning.
Today 99% of our orders have at least one form of automation through XPO Connect, and 60% of our quotes in truck brokerage are created digitally–for our main objectives. We want to make business easier for our carriers and for our customers and to have a more intuitive and efficient interface.When you let them reap some of the benefit from your technology, that is great for customers and consequently great for share. We are increasing the productivity of our employees; our people can be far more efficient and productive than they were in the past using the technology as an asset and an ally.Another factor is we have great pricing insight that allows us to deliver superior value to our customers.
They are all central to the value of XPO Connect for us and then–as for what you do in a tight market–we have the ability, through our customer relationships, and people come to us…with our carrier relationships and the quality of our technology, we can find capacity. We have leaned into this environment with confidence and innovation, and it is a good brokerage market for us.LM: It is pretty clear that the growth being seen through transportation outsourcing, specifically for truckload brokerage services, over the last 20 years or so continues to rise. How do you view that?Fassler: It shows that customers are voting [for outsourcing] with their wallets.
It is pretty cool but still only a small part of the market.There are hundreds and hundreds of brokers so the opportunity for us is both within that market and then to grow that market and leading with technology in an asset-light fashion creates lots of runway, so it is a wonderful spot to be in.LM: It is clear that the 2021 Peak Season is lining up to be unique and different due to the myriad supply chain issues out there. What do you think may be in store?Fassler: We are optimistic about it, as the consumer is spending. We are, of course, prioritizing customer service.
Labor is in tight supply, and that is true for any service business. We have always prided ourselves on being an employer of choice and have a number of initiatives to build on that desire and on that activity. LM: Are you talking to customers about getting ahead of schedule, for this year’s Peak Season, and what do you see as the main differences from 2020 to 2021?Fassler: To me, last year’s peak really marked the change, because we knew that in-store shopping was not really an option or a diminished option. There had to be a massive shift to an earlier peak or at least an earlier start to peak, and there ended up being a somewhat extended peak.2020 gave us a new starting point thinking about this activity.
I think what we will see will be intense, but we will have learned some lessons from 2020, in that consumers have been extending it in either direction.
- VTech Toot-Toot Cory Carson Remote Control Cory Carson Vehicle, Remote Control...
RRP PRICE: £22.99SALE PRICE: £17.99YOU SAVE: £5.00 REMOTE CONTROL CORY CARSON CAR: Encourage imaginative role-play fun with this remote control […]
- Warmies® 13'' Fully Heatable Soft Toy Scented with French Lavender – Llama
RRP PRICE: £12.95SALE PRICE: £11.93YOU SAVE: £1.02 About this item Safe alternative to a hot water bottle Easy to use, warm in the microwave […]
- Vtech Challenger Laptop
RRP PRICE: £32.99SALE PRICE: £29.99YOU SAVE: £3.01 Slim laptop with 40 curriculum-based activities Reinforces phonics, vocabulary, maths, music […]
- LOL Surprise OMG Guys COOL LEV Fashion Doll. With 20 Themed Surprises, Designer...
SALE PRICE: £33.00 About this item 20 SURPRISES INSIDE – LOL Surprise OMG GUYS comes with 20 surprises to unbox, including a beautiful Guy fashion […]