XPO Logistics (NYSE: XPO) is taking its last mile physical expansion over the border into Canada.
The company announced Wednesday that it was planned to open its first hub for its last mile operations in Toronto, the first in that country. The expansion is another step in XPO’s development of up to 85 last mile hubs--for now--that look to serve its business, which is the last mile delivery into the home of such things as dishwasher and washing machines.
Previously, according to an XPO spokesman, the last mile services in Canada would have been served out of a retail store. The carrier contracted by XPO to provide the last mile service would have picked up the merchandise at a retail outlet and then made the delivery.
The development of the hubs—71 of them at the time of the company’s quarterly earnings report, according to CEO Brad Jacobs in an interview with FreightWaves—marks the place “where big retail customers store their inventory, and that is where we take it from and deliver it into people’s homes and apartments.” Jacobs said also that the last mile business was “going gangbusters,” and that 16 hubs had been opened in the second quarter.
In a prepared statement about the expansion, XPO Logistics president Troy Cooper echoed some of those Jacobs comments. “Demand for our service is on the rise, as more people buy heavy goods online and retailers outsource deliveries,” he said. “Consumers in Canada already have access to a first-rate in-home experience from XPO with our experienced team and technology. Now we’re accelerating delivery to homes in the country’s largest metropolitan area.”
In the second quarter, XPO reported last mile revenues of $268.5 million, a gain of 16.5%.
In the earnings call, according to a transcript provided by SeekingAlpha, Jacobs said of the Last Mile growth plans: “We want to get to 85 (hubs) and then take a pause and see if that does the trick and see if our customers and, more importantly, their end customers are happy with that delivery time. And if they are, then that's good enough. If it's not, then we'll do what is necessary to please the customer. After 85, we're going to pause and see how that looks.”