Photo: XPO
XPO handled nearly 6% more shipments last quarter than a year earlier, while its headcount grew by a low single-digit percentage. XPO credits AI, which now plans its dock doors, its drivers' routes, its staffing and the way its trailers are loaded.
Why it matters: Labor is XPO's largest cost, so moving more freight with about the same crews is the first place AI would pay off. On its earnings call, XPO shared numbers for each of the four tools. CEO Mario Harik said the gains are still early.
Where it's used: Harik described four uses.
Linehaul. An AI model plans which trailer goes on which dock door. Harik said XPO now runs fewer empty miles and has cut freight rehandles by a mid-single-digit percentage, to the lowest level in over a decade.
Pickup and delivery. A routing tool sets each driver's route using customer appointment windows, distance and trailer capacity. It is on nearly two-thirds of routes. XPO expects to finish the rollout early next year.
Staffing. A forecasting model matches the labor at each service center to the volume XPO expects there. XPO credits this tool for the gap between shipments and headcount.
Loading. AI gives dock workers real-time feedback on how they load freight before the trailer leaves. Harik said that contributed to a 20% drop in damages from a year earlier. XPO's damage claims ratio is below 0.2%.
Routing results so far: Harik put the improvement on routes that use the tool in the low to mid single digits.
He said the gain is much higher at sites that have used the tool longest, because the model learns from each site's data.
Drivers are making more stops per hour and driving fewer miles per shipment, he said.
Why it needs AI: Labor is rising in cost every year.
CFO Kyle Wismans said wages are growing about 4% a year, with benefits adding another 1 to 2 points.
XPO's bill for salaries, wages and benefits rose 11%, or $72 million, last quarter.
Wismans said the AI programs in linehaul, pickup and delivery and the dock will offset part of that wage growth.
Reality check: Harik called this the "early innings."
The routing gain is in the low to mid single digits, on the two-thirds of routes that use the tool.
The linehaul and staffing models were both updated only last quarter.
XPO also had spare capacity. Harik said headcount stayed flat through the freight downturn. He said the current workforce can still take on a low to mid single-digit increase in shipments.
What's next: XPO expects the routing tool to be on every route early next year.
Harik said XPO will start using AI in pricing next year.
XPO's sales team already has new AI tools, he said.
