• ITVI.USA
    15,489.220
    61.880
    0.4%
  • OTLT.USA
    2.882
    0.016
    0.6%
  • OTRI.USA
    20.830
    -0.090
    -0.4%
  • OTVI.USA
    15,457.420
    58.770
    0.4%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
    -0.150
    -3.6%
  • WAIT.USA
    127.000
    -1.000
    -0.8%
  • ITVI.USA
    15,489.220
    61.880
    0.4%
  • OTLT.USA
    2.882
    0.016
    0.6%
  • OTRI.USA
    20.830
    -0.090
    -0.4%
  • OTVI.USA
    15,457.420
    58.770
    0.4%
  • TSTOPVRPM.ATLPHL
    2.820
    -0.100
    -3.4%
  • TSTOPVRPM.CHIATL
    3.580
    -0.100
    -2.7%
  • TSTOPVRPM.DALLAX
    1.260
    -0.030
    -2.3%
  • TSTOPVRPM.LAXDAL
    3.650
    0.030
    0.8%
  • TSTOPVRPM.PHLCHI
    2.330
    -0.090
    -3.7%
  • TSTOPVRPM.LAXSEA
    4.020
    -0.150
    -3.6%
  • WAIT.USA
    127.000
    -1.000
    -0.8%
Less than TruckloadNewsTop StoriesTrucking

Xpress Global Systems finds winning strategy in niche LTL market share play

XGS reaps rewards of consolidation in specialized LTL

Fresh off acquiring two respected competitors, carpet hauler Xpress Global Systems (XGS) is standing up service centers in new regions and offering customers unprecedented visibility into its installers. XGS has embraced its core identity and is looking to find further efficiencies by scooping up market share — while still building flexibility into its network to ride out downturns in homebuilding. 

Just a few years ago in 2018, XGS, the Chattanooga, Tennessee-based specialized less-than-truckload carrier focused on rolled floor covering was troubled. 

Its private equity owners at the time — Panton Capital and Mosaic Investments — had no prior experience in transportation; a freight diversification strategy was overcomplicating its operations; and customer overconcentration meant that one big box retailer held more than 30% of XGS’ business. At times, XGS’ operating ratio exceeded 100%. The business wasn’t sustainable and sold to Aterian Partners, a private equity firm focused on turnarounds, in December 2018.

Fast-forward three years and an integrated business model and operating strategy have come into focus. FreightWaves spoke to XGS Chief Executive Officer Dan Martin, who came aboard in April.

“XGS had gone through a phase of diversification prior to my leadership here,” Martin said. “Now we’re embracing who we are and our core competence, which is to be the leader in floor covering servicing the whole country on time and in full.”

Martin’s career in transportation and logistics began with a decade at Ryder System (NYSE: R) before he helped grow Ifco Systems and sell it to CHEP, eventually spinning it off again and serving as Ifco’s North America president. Growing specialized packaging and fulfillment businesses, Martin said, was a common thread connecting his time at Ifco, CHEP and XGS.

(Photo: Xpress Global Systems).

Embracing its identity in floor covering does not mean that XGS won’t haul anything else, although 60-70% of XGS’ 1.3 million square feet of warehousing space is fixed and dedicated to floor covering, Martin said. The other 30-40% is meant to be a “nimble, flexible network.”

“At the end of the day, we’re a network of LTL sites that could operate like any other, but we want to focus on the rolled flooring business and be the expert there,” Martin said.

The recent acquisitions of Michigan Carpet and 7 Hill Transport, both regional LTL carriers in the same industry segment, illustrate the new XGS strategy.

“We created a growth strategy in terms of a commercial market attack plan and who’s actually out there to help us grow and developed a list of targets,” Martin explained. “Both Michigan Carpet and 7 Hills have been on our list for a lot longer than I’ve been here. There’s a tremendous amount of respect for them in the marketplace, especially for their excellence in service.”

Now Martin’s team is optimizing XGS’ expanded network. XGS has seven flagship locations that serve as origins and destinations for the linehaul moves that connect its various regions — Baltimore, Indianapolis, Chicago, Seattle, Dallas, Chino, California, and Lakeland, Florida — and they fit well into the Michigan Carpet and 7 Hills networks. XGS is in the early stages of an engagement with Chainalytics to use Llamasoft on further lane-level network optimization, Martin said.

“Our goal is to be the lowest-cost provider out there and to do it with incredible customer service,” Martin said. “We’re identifying the lowest-cost options to drive higher volumes and meet the same timetables throughout our network.”

Increasing consolidation in the floor covering space presents an opportunity for XGS, Martin said. Years ago, dozens of LTL carriers competed for the same niche carpet business, many just scraping by or succumbing to the cyclicality of residential construction. Now XGS finally has the chance to build a lasting moat around its business through scale and pass on cost savings to shippers. A new service center in Charlotte, North Carolina, investments in the Northeast and filling in white space in the Midwest should continue to drive solid organic growth.

“We’ve had high double-digit revenue growth year-to-date — that’s not net new wins or acquisitions,” Martin said. “We’ve had a bunch of net new wins as more carriers abandon floor covering. We see good demand through Q4: Commercial construction hasn’t peaked yet and China’s supply issues are still ongoing.”

That growth allayed the customer concentration risk that plagued XGS in the past, Martin said.

“Fortunately, through our growth strategy and our acquisitions, our biggest retailer does not represent that great a share of our business,” Martin said. “It’s significant, but not a share that’s comfortable, and we have a contractual relationship that I feel good about.”

But “incredible customer service” means more than just reliable capacity in Martin’s reckoning. XGS has beefed up the customer experience across the board, investing in its FreightTracker customer portal and public APIs to feed visibility data, rate quotes, service center lookups and other information to shippers. 

A key visibility focus for XGS is connecting customers to its installer network. Installers are the last people who touch the carpet; their warehouses receive flooring from XGS and typically hold the product for less than 72 hours before it’s installed. But that window can be a black hole for visibility at a time when the end customer may be trying to source precise information about the flooring’s whereabouts from XGS’ customer. 

“Historically, if a shipper placed product in any one of our warehouses, they could access it in our portal, but as soon as it left our hands and went to an installer, in some cases but not all, they lost visibility,” Martin explained. “But we’ve been able to build an extended portal that offers visibility even when it’s in an installer’s warehouse.”

As XGS assumes more responsibility over the end-to-end customer experience, the carrier is planning a foray into final mile. Today, XGS executes some final-mile deliveries, almost all of them to large-scale commercial projects and very little to residential. But next year, Martin said, XGS will launch a residential final-mile pilot in a select location that, if it goes well, could be a sign of things to come.

“Xpress Global has got an amazing position in the industry with the most square footage of any independent provider,” Martin said. “The more business and services we can consolidate, the greater the value proposition for the retailer.”

John Paul Hampstead, Director, Passport Research

John Paul conducts research on multimodal freight markets and holds a Ph.D. in English literature from the University of Michigan. Prior to building a research team at FreightWaves, JP spent two years on the editorial side covering trucking markets, freight brokerage, and M&A.

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