Dive Brief:
- XPO Logistics will soon expand its home delivery service to Europe, The Wall Street Journal reported.
- The announcement comes on the heels of a record breaking annual statement and another announcement that the company, flush with additional free cash flow, aims to complete another acquisition by the end of 2018.
- The 3PL is setting the bar high for 2018, but XPO is on sound footing. While these forward-looking statements are subject to change, they're a good indication of XPO's position in the industry as the company aims to become a top global logistics provider.
Dive Insight:
Last-mile delivery is a challenge, no matter where in the world it occurs. Consumers all want the same thing: speed, accuracy and low- (or no-) cost delivery, whether shopping online or at a local store.
According to an Accenture study, just 36% of consumers shopping online are willing to wait for free delivery. 46% expect next-day delivery to be free, 44% would pay just $5 or less, and only 19% would pay more than $5 for same-day delivery.
XPO Logistics has made its name delivering heavy items such as refrigerators, bulky furniture and washing machines. In western Europe, many urban consumers lack cars and depend on delivery to get large items like those to their homes. And, because many of the continent’s cities are densely populated with old, narrow streets, the difficulty is compounded because there’s little room to build new facilities.
The European rollout will focus only on heavy goods, which is the company’s expertise. It will serve both the B2B market as well as Europe’s booming B2C market.
XPO already has seven last-mile depots in the UK for next-day delivery via a network of subcontractors, as well as its own trucks. That’s an important starting point because 87% of UK consumers shop online, and the region actually accounts for 33% of European online sales.
In other countries, though, they’ll be starting from scratch.
XPO’s North America-honed last-mile experience, including sophisticated IT and tracking, will play well, but the difficulty will be finding—or building— facilities in urban city centers. One advantage will be that its 2015 acquisition of Norbert Dentressangle, a provider of contract logistics — including e-commerce fulfillment, freight brokerage and transportation, and global forwarding services — gives XPO a well-established presence.
Known for its M&A activity — Con-way and Norbert Dentressangle were acquired in 2015 — XPO has grown quickly by acquiring U.S. and European trucking, freight brokerage and online fulfillment companies and has earmarked as much as $8 billion for deals in 2018, according to CEO Bradley Jacobs.
