Dive Brief:

• XPO Logistics is still looking to make up for the business it lost last year when its largest customer, widely believed to be Amazon, decided to downsize its operation with the transportation and operations company, XPO CEO Brad Jacobs said on the company's recent earnings call.
• XPO is "making great, great progress replacing" the lost revenue from the customer, Jacobs said. But the loss of the customer in its postal injection business, which brought in $600 million in revenue for XPO, is still being felt.
• XPO saw its revenue growth slow from Q1 going into Q2 and "most of that [is] related to the downsizing of business from our largest customer," XPO Chief Strategy Officer Matt Fassler said on the earnings call. But this impact is in line with expectations and the company is optimistic about growth it is seeing in sales related to new technology investment, a spokesperson told Supply Chain Dive in an email.

Dive Insight:

This customer pulled out its business from XPO in the fourth quarter of 2018, which resulted in multiple warehouse closures.

XPO is just one logistics company to divorce from Amazon. FedEx announced earlier this summer it would not renew its Express domestic contract with the online retailer. This all comes as Amazon is investing heavily in every stage of its supply chain from robotics in its fulfillment centers to last-mile innovations. It also listed logistics companies as competitors for the first time this year.

XPO experienced year-over-year declines in income, net income for the first six months of the year and revenue. But it did see increases in earnings per share.

While the logistics company is dealing with the loss of Amazon, it has also had to navigate a freight market with lower demand. "You have sluggish volumes in general," Jacobs said of the recent less-than-truckload market. "Negative tonnage pretty much across the board and that's been that way for a while."

XPO pointed to its technology investments as projects that were paying off for the company. This includes XPO Smart, a labor tracking and productivity system, which is currently being piloted in multiple locations and is expected to be in all of its LTL services centers by the end of the year, Jacobs said. And the company's freight marketplace, XPO Connect, is being used by more than 28,000 carriers, Fassler said.

XPO estimated these technology investments have the potential to generate between $700 million and $1 billion in profit growth by 2022, according to a slide deck released with the recent earnings.

"We're also enhancing productivity by applying machine learning for dynamic pricing, route optimization of pickup and delivery, line-haul efficiency and yard management," Jacobs said. "These workstreams are the next leg of significant profit improvement in our LTL operations."