XPO Spinoff Highlights Logistics Transformation

Brahm Buck

Share Tweet Share Share Share Email The great digital shift is poised to bring logistics into the fully digital age, where high tech shaves seconds off of warehouse activities – ultimately leading to a more satisfied consumer. To that end, XPO Logistics is inching ever closer to its spinoff of 100 […]

The great digital shift is poised to bring logistics into the fully digital age, where high tech shaves seconds off of warehouse activities – ultimately leading to a more satisfied consumer. To that end, XPO Logistics is inching ever closer to its spinoff of 100 percent of its logistics segment into what will be a publicly-traded company.

The company said on Thursday (March 18) that the name of the spinoff will be GXO Logistics. In a statement, Brad Jacobs, chairman and chief executive officer of XPO Logistics, said that the three letters “stand for the game-changing opportunities we’re bringing to the table for customers, employees and shareholders.” XPO said the spinoff would be focused on eCommerce and omnichannel retail, digital capabilities “and a shift toward outsourcing supply chain services.”

The spinoff was announced in December. In terms of mechanics, it would separate XPO into two separate entities, one focused on transportation (XPO) and one on logistics (GXO). Post-spinoff, according to the announcement, XPO’s transportation business will remain centered on less-than-truckload and truck brokerage. GXO, according to the firm, will be among the largest logistics providers in the world.

The spinoff is slated to close in the second half of this year. XPO has filed what is known as a confidential Form 10 registration with the SEC, among the steps that bring the spinoff closer to reality.

Wearables in the Warehouse

In a nod to the ways that high tech can reshape logistics in eCommerce services, XPO said last year that it had successfully piloted wearable barcode scanners in tandem with tech partner ProGlove. The company stated that in the pilot, scanners could be worn on the back of the hand and paired with augmented reality (AR) headsets or other connected devices, with real-time info tied to storage, product identifiers and inventory levels. Initial findings, according to the details tied to the wearables, include six seconds saved “per pick,” which represents an efficiency gain of about 10 percent – and a 75 percent reduction in errors per million units picked.

This type of improvement – bit by bit, pick by pick – has positive ripple effects for the last mile, where speed is critical and so much is being delivered to the doorstep. Investing in warehousing is a given for XPO – and for the eCommerce giants such as Amazon and Deliverr that are building new hubs in an effort to shorten distance and time to those doorsteps. Deliverr, for example, said earlier this month that it raised $170 million in new funding to expand its warehouse space and evolve its logistics technology to be faster, cheaper and more hassle-free.

eCommerce, after all, is slated to become a $1 trillion vertical by next year. And along with that outsized shift in the commerce landscape comes a shift to outsized warehouses, too.

As profiled in this space last year, Colliers said in a report that “as evidence of the need for warehouse and distribution space despite the global pandemic slowdown, net occupancy gains for bulk industrial space totaled nearly 79.8 million square feet at mid-year, up 51 percent over the 52.8 million square feet transacted at mid-year 2019.”

The trend, then, is that more demand for more items equals more demand (from the logistics side of the equation) for more space. But within the warehouses, everything from wearables to robots will help satisfy the urgency tied to eCommerce, where delivery windows are shortening and getting it wrong means a retailer loses a customer.

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