XPO Logistics Inc. and Echo Global Logistics Inc. clocked in late today with strong fourth-quarter and full-year results, another sign that transportation and logistics providers benefitted from what became by the end of 2017 a synchronized global economic recovery.
Separately, XPO Chairman and CEO Brad Jacobs confirmed the Greenwich, Conn.-based company is on track to complete one or two major acquisitions by year-end. XPO issued 11 million shares last year with at least part of the proceeds expected to be used to fund acquisitions. The company, which built much of its business on the back of a 4-year acquisition spree starting in 2011, has been off the acquisition trail since it acquired Con-way Inc. for $3 billion in September 2015.
For the year, XPO reported total revenue of $15.4 billion, compared with $14.6 billion for 2016. Net income rose to $312.4 million from $63 million. Adjusted net income, which takes out gains or costs that the company deems not to be germane to its core operations, rose to $248.5 million from $121.5 million in 2016.
The company reported solid fourth-quarter gains across its transportation and logistics businesses, with the one exception being managed transportation, which has long been a weak spot. The less-than-truckload (LTL) operation, which was the largest part of the old Con-way business, posted a 44 percent gain in operating income, and improved its adjusted operating ratio-the ratio of revenues to expenses-to 89.9 percent, its lowest fourth quarter ratio in 12 years. Jacobs said the company hired 90 LTL salespersons in the past 60 days, and plans to hire 80 more in the next 60 days.
Jacobs said U.S. truck capacity remains very tight, pushing more of its brokerage business onto the now quite-lucrative spot, or non-contract, market, and away from contractual relationships. He said North American and European economies, the two regions where XPO operates, are doing well, as are most of the industries XPO supports. Barring an unexpected and highly disruptive event, there is little to impede growth for the balance of 2018, Jacobs said.
Meanwhile, Chicago-based Echo, a freight broker, reported a 38.2 percent increase in fourth-quarter truckload gross revenue, and a 29.7 gain in LTL gross revenue. Net revenue, which deducts the costs of purchased transportation from the gross revenue figure, rose 29.7 percent from the fourth quarter of 2016.
For the year, total revenue rose to $1.9 billion, a 13.2 percent increase. Truckload and LTL gross revenue rose 13.9 and 15.1 percent, respectively. Net revenue rose 6.4 percent to $339 million, perhaps an indication of the impact of higher freight charges.