XPO, Inc.

What they do

XPO moves goods through customer supply chains using proprietary technology, serving approximately 55,000 customers in North America and Europe as of June 30, 2026, with about 38,000 employees. The North American LTL segment is the largest component of the business and includes the company's trailer manufacturing operation. The European Transportation segment provides dedicated truckload, LTL, full truckload brokerage, warehousing, managed transportation, last mile, freight forwarding and multimodal services.

Revenue drivers

• North American LTL — The largest segment, with about 9% share of a U.S. LTL market estimated at $52 billion in 2025; serves roughly 38,000 shippers with day-definite service to about 99% of U.S. ZIP codes and cross-border service to Mexico, Canada and the Caribbean.
• European Transportation — A pan-European platform where XPO says it is the #1 full truckload broker and #1 pallet network (LTL) provider in France and the #1 full truckload broker and #1 LTL provider in Iberia; generated $927 million of second quarter 2026 revenue.
• Trailer manufacturing — A company-owned trailer manufacturing facility reported within the North American LTL segment, described as a self-reliant competitive advantage for sourcing equipment.
• Fuel surcharges and contractual rate mechanisms — Customer contracts include fuel surcharge clauses and general rate increases, which the company says it uses to mitigate inflationary pressure on costs such as fuel and salaries.

Recent performance

Second quarter 2026 revenue was $2.36 billion, up 13.2% from $2.08 billion a year earlier, with operating income of $271 million versus $198 million. Diluted EPS was $1.36 versus $0.89, and adjusted diluted EPS was $1.70 versus $1.05. North American LTL revenue rose 15.2% to $1.43 billion and segment operating income rose 43.2% to $285 million; the company cited a record 79.9% adjusted operating ratio for the segment. European Transportation revenue rose 10.2% to $927 million but posted a segment operating loss of $6 million, compared with $11 million of operating income in the prior-year quarter. Results included $7 million of gains from real estate sales ($9 million pre-tax, or $0.06 per diluted share) in the 2026 quarter, with no comparable gains in second quarter 2025.

Strategy

Management is investing in capacity, technology and people, and says it has built more than 30% excess door capacity into the North American LTL network, having added more than 2,000 net new doors since its growth plan began in the fourth quarter of 2021. The company is deploying AI-enabled linehaul models, pickup-and-delivery routing innovations and real-time labor analytics at the service center level, which it says are improving productivity and profitability. It also operates a trailer manufacturing facility and commercial truck driver schools as internally controlled sources of equipment and drivers. In Europe, the Board's previously announced authorization to divest the European business remains in effect, with no assurance on whether, when or on what terms a transaction will occur.

Risks

• Freight recession and cyclical demand — The company describes the overall freight environment as continuing to be recessionary, and lower purchase and production of goods would reduce volumes and pressure rates and margins.
• Tariff and trade policy uncertainty — XPO cites uncertainty over tariffs imposed, revoked or reciprocated between the U.S. and its trading partners, including impacts on import costs, export competitiveness and end-market demand for customers' products.
• Cost inflation — Inflation can raise operating costs including salaries, wages and employee benefits, fuel and insurance; salaries, wages and employee benefits rose to 42.0% of revenue in 2025 from 41.8% in 2024 partly on wage inflation and linehaul insourcing.
• European divestiture uncertainty — The Board has authorized a divestiture of the European business, but the company states there can be no assurance that the divestiture will occur, or of the terms or timing of a transaction.

Outlook

Management says it sees significant growth potential in its major markets and intends to keep investing in long-term capacity, gaining profitable market share and aligning price with the value it provides. It believes U.S. demand for LTL services may increase when interest rates decrease or tariff uncertainties subside, as both historically correlate to a rebound in industrial activity. The company says LTL industry capacity is constrained below pre-pandemic levels and that its capacity and technology position it to respond to a rebound when the freight recession eases. CEO Mario Harik said service quality, network, fleet and people investments are driving outperformance and accelerating free cash flow as freight demand strengthens.