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How Changes in E-Commerce Affect XPO Logistics' Business

As e-commerce has exploded over the past decade, supply chains have had to adapt to new demands. In particular, logistics has become vastly more complicated. To better serve customers as consumer preferences change, XPO Logistics (NYSE: XPO) has developed expertise in last-mile delivery, specifically targeting heavy packages like furniture and appliances.

In this segment from The Motley Fool's Industry Focus: Energy podcast, MFAM Funds' Bill Barker and host Nick Sciple discuss the effects of e-commerce on logistics networks and XPO's efforts to position itself for success.

A full transcript follows the video.

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Nick Sciple: What's particularly interesting to me and attractive to look at this space right now is, as e-commerce has emerged over time, the complexity of logistics and moving things around has only increased as we move small numbers of packages to individual homes vs. large numbers of what might be full truckload shipments to stores or things like that. As the role of e-commerce grows in the economy, what opportunities does that provide for XPO Logistics? Is that the main driver for their business over time? How should we think about the shifting demand for logistics and what role that might play in XPO's business moving forward?

Bill Barker: It's still rapidly growing. The last-mile challenge, they're the leader in last-mile deliveries. That's getting... it's not really packages, they're moving heavy goods on last-mile. If you order a washer, dryer, it needs to be installed in your house, there's a very good chance that XPO is going to be the one doing that. That's high-touch. You've got skilled labor that's involved. It's very consequential to the purchaser whether it's done right and whether the right window is met, and all that. There are better profits to be gained by doing that right than by just moving parcels around. As good as the parcel business is for UPS and FedEx and the U.S. Postal Service, that's a business that XPO is not going to get into. But the last-mile heavy goods stuff is growing because of the growing use of e-commerce. It has been growing very nicely for XPO, although, as we'll get to, there's been a little hiccup in that.

Bill Barker has no position in any of the stocks mentioned. The Motley Fool recommends XPO Logistics. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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