XPO’s freight volume shows growth in February

XPO Sees Tonnage Growth in February After Months of Decline

For the first time since June 2024, XPO, a leading less-than-truckload (LTL) carrier based in Greenwich, Connecticut, reported an increase in tonnage during February. This positive development was announced on Monday, following the release of a second consecutive upbeat manufacturing report earlier that day.

According to XPO (NYSE: XPO), tonnage in February edged up by 0.2% compared to the previous year. This modest gain was driven by a 3% rise in daily shipments, though it was nearly offset by a 2.8% drop in average weight per shipment. Final figures for January indicated that tonnage remained unchanged year-over-year, with shipments up 1.2% and weight per shipment down 1.2%.

During an earnings call in early February, company leaders noted that January’s tonnage would have increased by 3% year-over-year if not for disruptions caused by severe winter storms. February’s results were also likely dampened by a major blizzard that brought nearly three feet of snow to New England at the month’s end.

Previously, XPO had projected that first-quarter tonnage would remain flat compared to the prior year.

Recent manufacturing data released on Monday showed that industrial activity remained in expansion for the second time this year. The Purchasing Managers’ Index (PMI) recorded a reading of 52.4 in February, slightly below January’s figure. (A PMI above 50 indicates growth, while below 50 signals contraction.) The index has mostly been in contraction for over three years.

The subindex for new orders, which often signals future trends, reached 55.8. Historically, changes in the PMI tend to precede shifts in LTL volumes by several months.

Last year, XPO added 10,000 new local accounts—primarily small and midsize shippers, which generally offer higher margins. The company is also broadening its grocery consolidation services and has recently secured contracts with several major healthcare clients.

Looking at a two-year comparison, XPO’s tonnage performance improved each month from October (down 11.8%) to February (down 7.9%).

Typically, XPO experiences a 50 basis point decline in operating margin from the fourth quarter to the first quarter. However, this year, the company anticipates margin improvement. Even if margins remain flat compared to the previous quarter, this would represent a 150 basis point year-over-year gain, placing results at the upper end of XPO’s full-year 2026 guidance (which calls for a 100 to 150 basis point improvement).

To drive profitability, XPO is implementing several cost-saving initiatives, including leveraging artificial intelligence to boost efficiency across its dock, linehaul, and pickup-and-delivery operations, reducing reliance on outsourced transportation, and lowering equipment maintenance expenses by operating a younger fleet. The company’s margin outlook for the year does not factor in a broader economic recovery.

On Monday, XPO’s stock price remained unchanged in after-hours trading. During the regular session, shares rose 2.2%, while the S&P 500 finished flat.