XPO’s tonnage officially returned to positive territory in February for the first time since June 2024. The Monday update from the Greenwich, Connecticut-based less-than-truckload carrier followed a second consecutive favorable manufacturing report released earlier in the day.
XPO (NYSE: XPO) reported a 0.2% year-over-year increase in tonnage during February as a 3% increase in daily shipments was largely offset by a 2.8% decline in weight per shipment. Final January numbers showed tonnage was flat y/y, with shipments up 1.2% and weight per shipment down 1.2%.
Management said on a fourth-quarter call in early February that January tonnage would have been 3% higher y/y, excluding the impact from severe winter storms. February tonnage was likely negatively impacted by a blizzard that dumped roughly three feet of snow across New England at the end of the month.
The company previously forecast tonnage to be flat y/y in the first quarter.
Manufacturing data released Monday showed industrial activity was positive for the second time this year. The Purchasing Managers’ Index registered a 52.4 reading in February, 20 basis points lower than January. (A reading above 50 signals expansion while one below 50 indicates contraction.) The dataset has largely been underwater for more than three years.
The new orders subindex—an indicator of future activity—came in at 55.8. (Inflections in PMI data usually lead LTL volumes by a few months.)
XPO added 10,000 local accounts (small and midsize shippers), which typically have better margin profiles, last year. The company is also expanding its grocery consolidation offering, and it recently inked deals with a few large customers in the healthcare sector.
On a two-year-stacked comparison, XPO’s tonnage comps improved in each month from October (down 11.8%) to February (down 7.9%).
The company normally sees 50 bps of sequential operating margin deterioration in the first quarter, but it expects to record improvement this year. Even if its margin came in flat with the fourth quarter, that would be 150 bps better y/y, and at the top end of its full-year 2026 guidance range (100 to 150 bps of y/y improvement).
The company’s cost levers include: AI-driven efficiency gains across its dock, linehaul, and pickup-and-delivery operations, a reduction in outsourced miles, and lower equipment maintenance costs resulting from a lower average tractor age. Its full-year margin guidance doesn’t assume a macroeconomic recovery.
Shares of XPO were unchanged in after-hours trading on Monday. The stock was up 2.2% during Monday’s session compared to the S&P 500, which was flat on the day.
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