U.S. Xpress (NYSE: USX) announced more details on its brokerage unit, Xpress Technologies, Tuesday. The digital platform is designed to remove friction from freight brokerage and “make goods move better every day.”
The Chattanooga, Tennessee-based truckload carrier said the new unit is headed by Joel Gard, who joined U.S. Xpress from Coyote Logistics at the end of 2019. At Coyote, Gard led the company’s entrance into the European brokerage market, expanding the digital freight platform to include more than 30 countries. U.S. Xpress is hoping for a repeat performance with Gard building the platform with talent “from within and outside the transportation industry.”
“As we digitally transform U.S. Xpress and develop a full suite of transportation solutions built for today’s supply chain, a robust digital brokerage capability has become an increasingly vital component of our long-term growth strategy,” said Eric Fuller, president and CEO at U.S. Xpress. “With Xpress Technologies, we’ve made significant investments in talent and tech that will bring greater visibility, efficiency and flexibility for shippers and carriers alike.”
Xpress Technologies began as an incubator in 2020 when U.S. Xpress acquired a small transportation data services company that had a scalable platform, which it integrated into its existing brokerage division. “Coupling a purpose-built technology stack with a focused and financially disciplined growth strategy has helped improve recent performance for this business unit,” the release read.
During the 2021 first quarter, the company’s brokerage segment recorded more than 42,000 loads (-3% year-over-year), two-thirds of which were executed on the digital platform. Revenue surged 62% to $82 million as a jump in freight rates led to a gross margin of 14%, more than 1,000 basis points of improvement.
The division saw less than 1% of brokered loads executed digitally in 2019.
The digitization of the company’s brokerage offering is designed to improve carrier optimization and provide access to “consistent, equitably priced freight.” Shippers will see enhanced supply chain visibility on the platform.
U.S. Xpress has a goal to double consolidated revenue over the next four years to roughly $3.5 billion. Scaling the brokerage segment, which recorded $229 million in revenue during 2020, is a big part of the revenue goal.
“Xpress Technologies is solving challenges for both shippers and carriers by assembling an innovation-focused team that is building and deploying new technologies which streamline the digital brokerage process and aids in our curation of a high fidelity experience for our partners,” said Gard. “Though our journey has just begun, we’re pleased by the insights and early momentum we’re building with our team, our shippers and our carrier partners.”
U.S. Xpress said the digital brokerage platform is complementary to its digital asset-based fleet, Variant.
Less than a year ago, the company launched the fleet, which uses artificial intelligence and digital platforms to automate the planning, scheduling and dispatching of tractors. Recent results have shown improved asset utilization and better operating results.
The company recorded roughly 100 more revenue miles per Variant tractor versus its legacy fleet in the first quarter. Pulling out transition and startup costs, the fleet has been operating at a roughly 1,200-bp premium.
Variant has more than 1,000 tractors in service currently. The goal is to reach 1,500 units in operation by year end, which would produce an annual revenue run rate of approximately $300 million.
“Both Variant and Xpress Technologies blend seamlessly with the company’s established Dedicated business unit, which services major shippers and continues to deliver operating efficiencies for the company,” the press release concluded.
Disclosure: FreightWaves founder and CEO Craig Fuller retains ownership of U.S. Xpress shares through his family trust.
- XPO provides GXO guidance, pulls forward spinoff date
- Yellow sees Q2 trends accelerate, still lags peers
- Modest inventory bump not likely to slow freight’s flow anytime soon