XPO enters same-day delivery field via network of newest acquisition

XPO Logistics Inc. has begun same-day delivery services with its recent acquisition of UX Specialized Logistics, a move that will expand the increasingly diversified service portfolio for Greenwich, Conn.-based XPO.

Bradley S. Jacobs, XPO's founder, chairman and CEO, confirmed that it has begun offering same-day services throughout New York City through the auspices of UX, which it bought in early February for $59 million. Based in New York, UX provides so-called last-mile logistics services for major retail chains and e-commerce companies. As an extension of the last-mile network, UX also offers same-day deliveries.

Jacobs said in an e-mail that XPO plans to leverage UX's network to expand same-day service capabilities to other U.S. markets. UX, which works with independent carrier contractors, has been integrated into XPO's "last-mile" delivery unit, known as XPO Last Mile.

Last-mile delivery services are traditionally associated with the short-haul transportation of heavy-weighted goods like household appliances from the retail store or warehouse to a residence. Last-mile services are gaining prominence as the mechanism to support the explosive growth of e-commerce demand, which puts a premium on super-fast deliveries to urban and suburban destinations.

Manufacturers and retailers increasingly outsource the last-mile delivery function because it is outside their core competency and can typically be executed more cost-effectively by a specialist. It is a specialized and high-margin business that generates billions of dollars in revenue each year. XPO entered the last-mile segment in a big way two years ago when it bought 3PD Inc., a Marietta, Ga.-based firm that was the leader in the field, for $367 million. 3PD was rebranded as XPO Last Mile.

As for same-day services, freight brokers and third-party logistics providers like XPO generally offer the service through networks of contractors.

XPO was formed in 2011 primarily as a freight broker, though it was also involved in freight forwarding and expedited transportation services. Through a series of acquisitions, it has expanded into intermodal, last-mile delivery, contract logistics, transportation management, and cross-border services in the U.S.-Mexico market. Jacobs has said that XPO will pursue an aggressive acquisition strategy as it seeks to hit $9 billion in annual revenue by 2017, and $575 million in annualized earnings before interest, taxes, depreciation, and amortization (EBITDA) by that time.