XPO’s freight volume sees growth in February

XPO Sees Tonnage Growth in February After Months of Decline

For the first time since June 2024, less-than-truckload carrier XPO reported an increase in tonnage during February, marking a return to growth. This announcement from the Greenwich, Connecticut-based company came shortly after a second straight positive manufacturing report was released earlier the same day.

XPO (NYSE: XPO) recorded a 0.2% year-over-year rise in tonnage for February. While daily shipment volumes climbed by 3%, this was nearly offset by a 2.8% drop in average weight per shipment. January’s final figures showed tonnage holding steady compared to the previous year, with shipments up 1.2% and weight per shipment down 1.2%.

During a fourth-quarter earnings call in early February, company leaders noted that January’s tonnage would have been up 3% year-over-year if not for disruptions caused by severe winter weather. February’s numbers were also likely impacted by a major snowstorm that brought about three feet of snow to New England at the month’s end.

Earlier forecasts from XPO had projected flat year-over-year tonnage for the first quarter.

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

The new orders component of the PMI, which often predicts future activity, reached 55.8. Historically, changes in PMI tend to precede shifts in LTL volumes by several months.

Last year, XPO added 10,000 new local accounts, primarily small and mid-sized shippers known for stronger margins. The company is also broadening its grocery consolidation services and has recently secured agreements with several major healthcare clients.

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

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

XPO’s cost-saving strategies include leveraging AI to boost efficiency across its docks, linehaul, and pickup-and-delivery operations, reducing reliance on outsourced miles, 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.

XPO’s stock price remained unchanged in after-hours trading on Monday, though shares rose 2.2% during the regular session, outperforming the S&P 500, which was flat for the day.