XPO Logistics invests in IT for the long haul

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“In order to run a dynamic LTL model, you need to be able to consolidate that freight data at various points and build density on the lanes that connect to your destinations,” Silberkleit says. “To have a dynamic network means we have machine learning models that are calculating the best path that the freight should take through the network and where we should build that density.”

XPO’s dynamic network doesn’t automatically generate efficiencies, he says, but it enables human analysts to focus on loading the trailers rather than spending a good amount of time planning how to load them. 

“Every day, we’re looking at what we’re picking up and instructing the machine learning model to send up instructions to a handheld that is able to instruct people how to load trailers in a certain way to maximize the densities in the least number of miles but still with the best service,” Silberkleit says.

Customers are also asking for — and receiving — more visibility on track their shipments with a greater level of detail. Here, XPO is using APIs to access custom data requests from its data lake, providing real-time feedback on where one customer’s merchandise is and how long it will take before it arrives.

“I think we’re one of the only carriers now that have piece-level tracking, which allows our customers to see in detail, when they put in their shipment number, the location and status of each of their pallets,” Silberkleit says.

Paying dividends

Under Harik and now Silberkleit, XPO’s digital transformation has been a key facet of the company’s upswing, the company claims. In its third quarter that ended in October, the LTL portion of XPO’s overall business generated $1.2 billion in revenue — representing an increase of 12% from the same quarter a year ago.

XPO notes in its SEC filings that its technology is a major driver of growth and operational efficiency and projects cost optimizations from its digital transformation will contribute between 3% and 4% of its forecasted 11% to 13% annual growth rate from 2021 through 2027, according to company data.

IDC’s Dave McCarthy, research vice president of cloud infrastructure services, points out that over the next five years, roughly 25% of companies planning a major business transformation will rely on cloud providers to help them achieve this goal. But it will be those, like XPO Logistics, who develop their own applications and analytics to best exploit the cloud that will see the most payoff.

“For large enterprises, this represents a significant investment in software as well as people that are skilled in data platforms, machine learning, and analytics,” McCarthy says, adding that “the potential to increase efficiency in operations through automation as well as improved customer experiences is viewed as essential element to create and sustain competitive advantage.”

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