XPO teams up with Mercedes-Benz for long-term deal

By Jeff Berman, Group News Editor · March 4, 2020

Greenwich, Conn.-based XPO Logistics, a provider of global freight transportation and logistics services, said this week it has inked a long-term partnership with Mercedes-Benz Parts Logistics.

Company officials said XPO will manage United Kingdom (UK) UK parts distribution through an integrated, digitally-managed transportation network. And they added that XPO will distribute automotive parts to Mercedes-Benz’s UK retail and commercial vehicle dealerships, running more than 40 routes on a daily basis from the Mercedes-Benz European Logistics Center in Milton Keynes and XPO’s overnight-delivery depots in Motherwell, Leigh, Wakefield, Gloucester, and Taunton.

What’s more, XPO said it is investing in 42 new trucks that will be dedicated to serving the Mercedes-Benz passenger and commercial vehicle dealer networks.

The core fleet, according to XPO, will consist mostly of the 2020 International Truck of the Year – the Mercedes-Benz Actros, with these trucks operated by XPO drivers and managed by a dedicated team of XPO distribution experts using customized technology.

“Our team is looking forward to embarking on this new partnership with Mercedes-Benz, a premier brand synonymous with quality in the automotive industry,” said Dan Myers, managing director, transport – UK and Ireland, XPO Logistics, in a statement. “The tailored technology solution we are providing will underpin service excellence and support Mercedes-Benz across its UK operations, lowering costs and increasing efficiency from day one.”

And Juan Manuel Santiago Mendez, CEO of Mercedes-Benz Parts Logistics – UK, noted that the Mercedes UK operation keeps consumers and businesses and is responsible for more than 750,000 parts numbers.

“We believe XPO has the scale, capabilities and expertise required to support our retailers and dealers with reliable distribution,” he said. “They have designed a comprehensive solution to our high standards, and their technology should enhance network visibility.”

Last month, XPO reported strong fourth quarter and full-year 2019 earnings.

Fourth quarter revenue—at $4.14 billion—was off 6% annually, but net income attributable to common shareholders—at $96 million—was up 14%. Adjusted EBITDA for the quarter headed up to $432 million, for a 14% increase, and XPO generated cash flow from operations, of $349 million, for a 38% annual decline, as well as $349 million of cash flow from operations and $221 million of free cash flow, which was down 54%. Adjusted earnings per share—at $1.12—were up 56% annually and topped Wall Street expectations of $1.08.

Full-year 2019 revenue was off 3.7% to $16.65 billion, and organic revenue growth saw a 9.3% annual gain, with earnings per share, at $3.47, ahead of 2018’s $2.88. Adjusted EBITDA for 2019, at $1.67 billion, was up 7%.

In January, XPO made an announcement regarding the sale, or spin-off, of some of its business units, with the exception of its North American LTL unit.

“This process is consistent with our long-held priority of maximizing shareholder value,” said XPO Chairman and CEO Brad Jacobs on the company’s earnings call. “We are proud of the outsized returns we have already delivered for our shareholders, and we continue to trade at a significant discount, to the sum of our parts…to the valuation of our pure play peers. The process is off to an excellent start.

March 4, 2020