[Stay on top of transportation news: Get TTNews in your inbox.]
XPO Logistics Inc. announced March 25 it has sold its North American intermodal business to STG Logistics, a Chicago-based provider of import-export and value-added warehouse logistics services, for a cash price of $710 million.
In 2021, Greenwich, Conn.-based XPO’s intermodal division generated $1.2 billion in revenue as it provided rail brokerage and drayage services at 48 locations with an estimated 700 employees. Those employees are expected to join STG Logistics as part of the sale.
On March 8, XPO announced it is creating two stand-alone, publicly traded companies in the less-than-truckload and tech-enabled brokered transportation sector. As part of that decision, XPO said at the time that it planned to sell its European business and North American intermodal operation to pay down some of the company’s $3.3 billion debt.
“This divestiture simplifies our business model and moves our capital structure closer to investment grade — two priorities in our strategic plan to unlock significantly more value for our stakeholders,” XPO Chairman and CEO Brad Jacobs said in a statement. “We’ve completed a key step in preparing for our planned spinoff, when we’ll separate XPO into two publicly traded leaders in less-than-truckload transportation and tech-enabled brokered transportation services.”
At the time of the announcement, the intermodal sale was expected to include XPO’s transloading business as well as 11,000 53-foot containers.
In a statement along with the news release, XPO said, now, as a stand-alone entity, STG Logistics will be able to develop the company into a “pure-play business” and with new ownership develop and grow the company at an even faster rate.
In a statement announcing the sale, STG said CEO Paul Svindland and President and Chief Financial Officer Geoff Anderman will continue to lead the company. Current Chief Operating Officer Todd Larson will lead the legacy operations as executive vice president of STG and COO of STG’s Distribution segment. Paul Smith, formerly president of XPO’s intermodal division, will lead STG’s intermodal operations as executive vice president of STG and COO of STG Intermodal.
“I could not be more excited about this game-changing acquisition,” Svindland said. “We are combining STG’s leading position in facility-based container logistics with XPO Intermodal’s leading position in container transport, creating a platform with unparalleled capabilities.
“Once combined, the STG network will be able to handle a container from the instant it’s ready at a port or customer facility to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a single source of accountability.”
STG operates a nationwide network of 28 port locations totaling more than 5 million square feet and maintains relationships with more than 65 inland partners that enable final-mile access to all major metro areas.
XPO’s intermodal division is North America’s third-largest provider of containerized transportation services, offering intermodal drayage and rail brokerage for retailers, manufacturers, third-party logistics providers and other customers. The XPO network had 48 locations, 2,200 tractors and 5,200 chassis. The division was formed through XPO’s purchase of Pacer in 2014 and Bridge Terminal Transport in 2015.
Today, we announced the sale of our North American intermodal business, a key step in advancing our strategic plan to create two pure-play industry powerhouses. Read more in our latest press release: https://t.co/6Uy8ewlWPI— XPO Logistics, Inc. (@XPOLogistics) March 25, 2022
As part of the agreement, STG announced that it is being recapitalized with funding from Wind Point Partners, as well as funds managed by Oaktree Capital Management L.P.
“We are thrilled to complete this initial stage of our journey with the team at STG, and excited to have the opportunity to reinvest in the combined business as it embarks on its next phase of growth,” Wind Point Managing Director Konrad Salaber said in a statement. “STG is expected to exceed $1.7 billion in 2022 revenue and maintains an aggressive strategy for growth focused on transloading, warehouse solutions, fulfillment and domestic intermodal services.”
It is expected XPO will now focus on expanding its less-than-truckload and freight brokerage operations.
Want more news? Listen to today's daily briefing above or go here for more info
“XPO’s North American LTL segment would be a pure-play LTL industry leader — the third-largest provider of domestic and cross-border LTL freight shipping,” the company’s March 8 statement said. “XPO believes that the separation of its North American LTL business from its asset-light transportation services will unlock significant equity value in both stand-alone companies beyond what is currently reflected in the existing conglomerate, for the benefit of all stakeholders.”
In December 2020, XPO announced it was splitting its logistics and trucking businesses into separately traded firms, aimed at giving each unit a more defined focus. That split was completed in August with the creation of publicly traded GXO Logistics.
XPO said its LTL business will continue to be run by the existing management team, including Jacobs, and remain headquartered in Greenwich. The LTL sector is responsible for 33% of the company’s revenue.
The new brokered transportation division, which includes last-mile delivery, managed transportation and freight forwarding, is expected to begin trading under a new name this year and will be headquartered in Charlotte, N.C.
XPO Logistics ranks No . 3 on the Transport Topics Top 100 list of the largest for-hire carriers in North America. It is No. 2 on the TT Top 50 list of the largest logistics companies.