91��Ƶ

North American LTL segment revenue for Q3 increased 0.3% to $1.26 billion from $1.25 billion during the same time last year. (XPO)

[Stay on top of transportation news: .]

XPO Inc. posted an increase in third-quarter revenue while taking a bottom-line hit due to legal costs tied to its 2015 acquisition of less-than-truckload carrier Con-way Freight, the company announced Oct. 30.

The Greenwich, Conn.-based LTL carrier reported net income of $82 million, or 68 cents a diluted share, for the three months ending Sept. 30. That compared with $95 million, 79 cents, the previous year. Total Q3 revenue increased by 2.8% to $2.11 billion from $2.05 billion.

“We continued to exceed expectations in the third quarter, delivering adjusted [earnings before interest, taxes, depreciation and amortization] of $342 million and adjusted diluted [earnings per share] of $1.07,” CEO Mario Harik said. “Both up year-over-year in a soft freight environment.”

The company noted that operating income decreased 6.8% to $164 million from $176 million during the same time the previous year. Year-over-year decreases in operating income and net income reflected a $35 million charge tied to a legal matter related to a subsidiary owned by Con-way prior to the company being acquired in 2015.

Harik noted that adjusted earnings before interest, taxes, depreciation and amortization of $342 million and adjusted diluted EPS of $1.07 were both increases despite an overall soft freight environment.

“Our service quality and focus on a more profitable mix drove another quarter of above-market yield growth and margin performance,” Harik said during a conference call with investors. “We also improved revenue per shipment — excluding fuel — sequentially for the 11th consecutive quarter. Underpinning this performance was the value shippers placed on our reliability and damage-free service. We’re also seeing benefits from a richer mix of local accounts and premium services.”

He also stressed that XPO reduced its shipment damage frequency rate to the lowest level in company history and returned a 14th consecutive quarter of improved on-time delivery performance.

“These improvements reflect the importance we place on delivering consistently for customers as a core tenet of our culture and the pride our team takes in meeting that goal,” Harik said. “We’re also optimizing our network so that our facilities, fleet and technology work together to reduce handling, shorten transit times and increase productivity. These operational gains are being supported by the investments we’ve made in our network and equipment.”

Specifically, he noted that investment in excess door capacity is being done purposefully “as a strategic tool aimed at optimizing freight flows and gaining profitable share gains.” He added, “On the equipment side, our investments have lowered the average age of our tractors to 3.6 years at quarter-end, giving us one of the youngest fleets in the industry. A newer fleet, combined with the efficiency of our maintenance program, strengthens reliability, safety and service performance. In the third quarter, it drove a 10% reduction in our maintenance cost per mile. Together, these investments are improving efficiency across linehaul, dock and pickup-and-delivery operations while ensuring we have the right capacity in place to support growth.”

“In North American LTL, we grew adjusted operating income by 10% to $217 million and improved our adjusted operating ratio by 150 basis points to 82.7%, significantly outperforming seasonality,” Harik said. “Additionally, we drove meaningful year-over-year and sequential improvements in yield, and our 11th consecutive quarter of sequential growth in revenue per shipment, excluding fuel. A combination of profitable share gains in the local channel and AI-driven productivity improvements generated strong margin out-performance in the quarter.”

North American LTL segment revenue for Q3 increased 0.3% to $1.26 billion from $1.25 billion during the same time last year. The earnings report highlighted how shipments per day and tonnage per day decreased year over year, but the company still managed to increase yields for the segment. Operating income increased 10.6% to $208 million from $188 million.

European Transportation segment revenue increased 6.7% to $857 million from $803 million last year. The segment posted an operating loss of $2 million, compared with operating income of $6 million last year.

“Our intense execution is resulting in record service quality and margin expansion at the trough of the cycle,” Harik said. “We’re in the early innings of realizing our long-term margin opportunity, and we expect performance to accelerate as our strategy continues to gain traction.”

TD Cowen analyst Jason Seidl in a report said improvements in XPO’s premium and small-to-medium business mix and the reductions in damage frequency helped lift Q3 margins. He noted that while excess capacity continues to drag down margins in the near term, this could portend strong incremental improvements when demand recovers.

“XPO came in above our forecast and consensus as XPO continued to exceed margin expectations despite historically weak industrial demand,” Seidl wrote. “October tonnage is trending above peers, and management is confident in earnings growth into ’26 irrespective of macro. We believe incremental margins offer material earnings power when the industrial backdrop inflects.”

XPO ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 35 on the TT Top 50 list of the largest global freight companies.