Dive Brief:

• XPO Logistics' revenue for its logistics business grew nearly 5% YoY in Q3, which the company credited to strong performance in e-commerce and omnichannel fulfillment, according to the company's Q3 earnings release.
• "Supply chain outsourcing is accelerating, and e-commerce continues to be a huge tailwind for us, particularly in contract logistics and last mile," XPO CEO Bradley Jacobs said in a statement.
• XPO said its sales strategy is currently focused on "high-growth e-commerce accounts and prospects." The growth in e-commerce is also leading to increased volume for the company's LTL business, according to the company.

Dive Insight:

XPO's earnings release comes as the retail world is gearing up for a peak that some experts project will be longer than past years. Consumers are set to shop more online as they look to avoid big crowds traditionally associated with the holiday buying season.

XPO executives said on a Friday earnings call they were already seeing this trend, and those expectations are driving company forecasts.

"Many of our consumer-facing customers anticipate a strong holiday peak, particularly in e-commerce," XPO Chief Financial Officer David Wyshner said on the call.

Chief Strategy Officer Matt Fassler specifically said the retail peak "has started earlier," suggesting the company already has holiday volume flowing through its network.

"Brick and mortar shopping is likely to be spread over a longer period of time as well as consumers look to avoid crowds," Fassler said. "Our supply chain and last-mile operations will be the biggest beneficiary."

XPO said it saw strong performance in the big and bulky, white-glove last-mile segment as consumers shifted spending away from services to items, such as appliances, furniture and electronics.

The company's expectations for a busy peak season are in line with what executives at other logistics companies have said in recent weeks.

FedEx Chief Information Officer Robert Carter said recently it is preparing for "peak on top of peak" as the pandemic has already increased e-commerce volume to above normal levels. And UPS said its network capacity has reached its limit, and the company is now helping shippers find alternatives to delivery.

A forecast from CBRE shows expected sales growth of less than 2% YoY for this peak season, but e-commerce sales are expected to rise more than 40% in November and December.

The resumption of automotive manufacturing has also resulted in rebounding intermodal volume, which executives said was "edging toward flat in the third quarter."

"We also saw increased demand for intermodal from retail customers, in part because of higher truckload rates," Fassler said.

In earnings calls last month, railroads said they were experiencing similar trends in the intermodal business and companies outlined ways they planned to improve their business to attract shippers from the trucking market.

XPO has also seen an increased interest in automation from customers, executives said. One analyst asked about Walmart's decision to shelve its inventory scanning robot project and if XPO still stood by its investment in robotics and technology. Fassler said the shelf-scanning robots were for different applications than the goods-to-person and collaborative rotors XPO deploys in its warehouses. He added that the company feels good about the productivity gains it's recording as a result of the investment.

XPO executives decline to provide guidance for 2021, and the pandemic and newly enacted shutdowns in Europe have further clouded economic outlooks. But executives voiced confidence despite these factors, underscoring that the new European lockdowns will affect the industrial sector less than they did in Q2.

After declining to provide specific guidance around the next fiscal year, Jacobs said, "At the moment, it's looking very good."