XPO Logistics said it has cut another 190 jobs, primarily at its less-than-truckload unit, to save more than $20 million annually.
The reductions were made to management, administrative and back office activities as the company tries to capture savings of between $170 million and $210 million annually from its purchase of the LTL business that was the largest unit of Con-way Inc. The latest announcement followed a November cutback that trimmed $30 million in annual costs by slashing 250 management positions.
The first round of cuts was made in early November, within days after completing the $3 billion purchase of Con-way, where improvements in profitability have lagged other LTL carriers.
"Our plan for LTL is very much on track for our near-term and long-term goals,” said Tony Brooks, president of the unit. “We plan to double the number of strategic account managers over the next few months. Our focus is on growing LTL by expanding our service capabilities and cross-selling LTL to XPO's full customer base."
All but 30 of the reductions were in the LTL business.
Meanwhile, XPO still hasn’t announced what it plans to do with the former Con-way Truckload unit. That business has been the subject of speculation for several months. CEO Brad Jacobs acknowledged soon after the acquisition of Con-way was announced that there could be asset sales, and that several potential buyers expressed interest in the unit.
"We don’t have an update on [truckload]; we have a review process that is going," Jacobs told TT, without naming a date for a decision on whether to keep or sell the unit.
Truckload was the smallest of the three units that Con-way operated and contributed just 12%, or $16.9 million, of profit before interest and taxes in the first half of last year. Its revenue was $281.4 million, or 10% of the corporate total. Earnings and revenue at the truckload unit both were more than 10% below the 2014 period results. Those results announced in July were the last earnings report from Con-way, a company whose roots stretched back more than eight decades.
In addition to buying Con-way, XPO last year acquired French logistics and trucking company Norbert Dentressangle, putting the Connecticut-based buyer on track to generate $15 billion in annual revenue. Those acquisitions have helped to position XPO to take over the No. 3 spot on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers. Before the acquisition, Con-way was No. 4 and XPO was No. 14.
Less-than-truckload freight produced 75% of Con-way’s first-half 2015 profits. Menlo Logistics accounted for 12%. Menlo was described as a “jewel” by Jacobs and was targeted to complement XPO’s other logistics businesses.
In total, Con-way added close to 40% to XPO’s annual revenue base.
Asked about recent executive departures at the freight and logistics businesses, Jacobs said, "We have a deep bench of talent in our LTL and contract logistics units. When you buy a company, sometimes there are too many people doing the same thing. You’re better off to make a clean, lean organizational chart."
The XPO official also noted that Con-way's management structure has changed to put profit and loss responsibilities in the operating regions to further sharpen decision-making.