XPO Logistics Inc. is working on a multi-year initiative to dramatically compress "last mile" delivery times for shipments of heavier goods ordered online, according to the company's founder, chairman, and CEO.

In an interview late yesterday, Bradley S. Jacobs said XPO plans to execute 1- to 2-day deliveries of heavier consignments by the end of the decade, which would be a significant reduction from the 5- to 6-day delivery time window that is today's benchmark for heavy consignments. As a large hauler, Greenwich, Conn.-based XPO possesses the scale that would be a critical factor in hitting those targets, Jacobs said.

The ambitious plan to improve heavy-goods deliveries is part of a broad emphasis on heavier shipments across XPO's network. The company's less-than-truckload (LTL) fleet, on average, runs about 65 percent full. XPO's objective is to raise that to 75 percent in the short to medium term, and to 85 percent over the long term, Scott Malat, XPO's chief strategy officer, said today on an analyst call to discuss first-quarter financial results. Each 1-percentage-point increase would add $9 million annually to XPO's bottom line by improving utilization of its trailers, even though it would result in lower revenues at each 100-pound weight break, Jacobs said. The yield per "hundredweight," is a key measure of an LTL carrier's performance.

XPO's typical weight per LTL shipment was 1,393 pounds as of the end of 2016, Malat said on the call today. The industry average is around 1,600 pounds. XPO is targeting single-digit annual percentage increases in its LTL "load factor" for this year and next, Malat said.

XPO's LTL unit, which consists of 8,500 tractors and 25,000 trailers, is the second-largest in North America, behind FedEx Freight, Memphis-based FedEx Corp.'s LTL unit. XPO entered the LTL space by buying transport and logistics provider Con-way Inc. in 2015 for $3 billion. Con-way's LTL unit, Con-way Freight, was the second-largest LTL carrier at the time of the acquisition.

The company's last-mile initiative is also a response to heightened expectations from e-commerce customers. As retailers expand their digital storefronts, they are making a wider range of shipments available for purchase. As a result, increasing volumes of transactions involve heavier products with irregular dimensions. This has created challenges for traditional parcel companies because their package sortation systems were not designed to efficiently process shipments of orders like skis and exercise equipment, to name just two.

However, customers ordering such products have the same delivery expectations as those receiving a small parcel. The delivery experience has become a key determinant in influencing a consumer's buying decision.

XPO's first-quarter revenue from last-mile operations grew 16 percent from the first quarter of 2016, according to the company's quarterly results disclosed late yesterday. E-commerce accounts for about 20 percent of XPO's last-mile traffic, a figure that is bound to increase.

In an effort to capitalize on the growth of last-mile demand for heavy goods, XPO is assembling a network to connect its contract logistics, less-than-truckload (LTL), and last-mile operations. The service is in the pilot phase, and is expected to be rolled out by year's end.

Virtually all LTL carriers have shied away from last-mile deliveries, which is the fastest-growing segment of surface transport, because their terminal networks are not designed to support that type of specialized operation. In addition, many heavy goods delivered to residences require some degree of installation, complicated skill sets that most LTL drivers don't possess. XPO provides this so-called "white glove" service largely through its 2013 acquisition of Marietta, Ga.-based last-mile delivery specialist 3PD Inc., whose drivers were also trained as installers.

In a related development, XPO reported strong first-quarter results, paced by its LTL operation, which reported a 49-percent increase in year-over-year operating income. Daily LTL tonnage in North America rose 4.8 percent quarter over quarter, the company said. However, John G. Larkin, transport analyst for investment firm Stifel Financial Corp., noted that XPO utilized 5.8 percent fewer tractors to carry the additional tonnage in the quarter. Larkin said in a research note today that the trend "underscores the extent of the operating leverage the company now has within their asset-based operations." This leverage will become a potent factor should industrial demand—which is LTL's bread and butter—begin to rebound, Larkin added.

The equity markets applauded the results, sending the value of XPO shares up 8 percent to $52.65 a share.