XPO targets organic growth

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The group has expanded dramatically through a series of take-overs, but it is now looking for double-digit organic growth, Malcolm Wilson, who heads the European logistics division, tells Malory Davies.

This article first appeared in the February 2016 issue of Logistics & Supply Chain

This article first appeared in the February 2016 issue of Logistics & Supply Chain

In August last year XPO set new sales and profits targets to reflect its expanded platform for global growth. It is targeting EBITDA of $1.5 billion by 2019 and revenue of some $23 billion. The US company has been growing rapidly through acquisitions, notably Norbert Dentressangle. XPO was founded as Express-1 in 1989. Today it is based in Greenwich, Connecticut with its European headquarters in Lyon, France.

As managing director, logistics – Europe, Malcolm Wilson leads the logistics business operations of XPO Logistics in Europe. He previously served in a similar role with Norbert Dentressangle, which he joined in 2007.

Logistics and supply chain is one of XPO’s three business units – the others being transport, and freight forwarding.

One of the significant changes since the takeover of Dentressangle has been the arrival of Troy Cooper as CEO of XPO in Europe to take over from Hervé Montjotin. This has been well received both within the organisation as well as externally, says Wilson. “Customers can see that the new owners are taking a strong interest in the business,” he says. “It also eases the integration of the business.”

XPO has been growing rapidly with some large acquisitions. In October it completed the takeover of Con-Way which owns Menlo in Europe. Menlo has significant operations in the Netherlands as well as a smaller operation in the UK, which will all be integrated into XPO’s offering.

The group’s strategy is to push ahead with rebranding operations as soon as possible. Wilson says that uniforms have been rebadged and virtually all of the building signage has been completed. Truck and trailer liveries are a bit slower to change, but the company works on a three-year replacement cycle for equipment so the bulk of vehicles will be carrying the new livery by then.

What is very apparent is the determination to grow the business. XPO may have become a global player through a series of big takeovers, but it is looking to organic growth to fuel the next phase of its development.

“We are looking for double-digit organic growth,” says Wilson. He sees a big opportunity to take best practice from the United States and implement it in Europe to help drive growth.

And he highlights the fact that its global reach means that it can now offer services that it was not able to in the past. Con-Way for example, had developed a strong network in the Far East that will give XPO the ability to support retailers sourcing in the region.

Looking ahead, says Wilson, XPO is very confident of the third party logistics market and he is looking for growth in the coming year. “It is really behaving quite strongly – it is certainly better than it has been,” he says.

One of the challenges facing third party logistics providers is that an increasing proportion of potential customers are already outsourcing some or all of their logistics. As a result there are fewer opportunities for 3PLs to win business with companies that had never outsourced logistics before and consequently they are having to compete to take over existing contracts.

Wilson points out that there is a strong degree of loyalty to partners. As long as the quality and efficiency of service is maintained, there is a strong incentive to stay together. But it’s an environment where third party logistics providers need real scale and the ability to provide all types of services – and it is companies with the scale and financial strength of XPO that will thrive in this environment, he says.

Not surprisingly, Wilson sees further consolidation in the 3PL market. “It’s very visible to see – larger organisations are getting larger and smaller organisations are disappearing.”

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