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XPO ready to deploy 28 new service centers

Company buys 3,000 doors at Yellow’s terminal auction

“In LTL, these assets don’t come by often,” XPO CEO Mario Harik said in an interview. (Photo: Jim Allen/FreightWaves)

Less-than-truckload carrier XPO will look to deploy a “once-in-a-generation” acquisition of terminals in the coming months. On Tuesday, a Delaware bankruptcy court approved the $870 million sale of 28 of Yellow Corp.’s service centers to the company.

XPO’s (NYSE: XPO) acquisition agreement is one of roughly 20 deals struck at a recent auction of Yellow’s real estate. In total, the first wave of sales includes 130 terminals at a total purchase price of $1.88 billion.

“In LTL, these assets don’t come by often,” XPO CEO Mario Harik said in an interview, referencing the anticipated addition of 120 acres in Carlisle, Pennsylvania, near Interstates 81 and 76 as well as nearly 50 acres at a site on the outer loop west of Nashville, Tennessee.

The company is also taking on new terminals in other areas it has targeted for growth, like Atlanta, Columbus, Ohio, Indianapolis and Nogales, Arizona, among others.


The acquisition agreement includes roughly 3,000 new doors compared to XPO’s current count of 17,000. However, in some areas it will only be replacing an existing site with a larger location. Harik said a new site in Brooklyn, New York, will increase its door count from 30 to 75.

Additional space in some markets is expected to improve dock efficiency and cut down the number of times a door needs to be turned each night, which means a reduction in paid hours. The process will also allow XPO to reduce “pedal time,” or the distance between driver and freight, in other areas.

All told, Harik estimates the entire acquisition will net a 10% to 15% increase in door capacity across the network.

He said the additional space will allow it to continue to improve its service offering to customers and raise prices to levels commensurate with the upgrades. Last week, the carrier said it achieved a record low for damage frequency during the first two months of the fourth quarter.


“We are incredibly excited about the outcome,” Harik added. “We were able to get some large facilities, a lot of acreage … doors that will help us effectively grow in markets where we see demand growing over the next 10 years.”

XPO will phase the opening of these sites based on market demand and the readiness of the facilities, some of which need repairs and all of which need rebranding. He said the process will occur throughout 2024 and into early 2025.

Harik said the acquisition represents roughly five to 10 years of its traditional facility growth plans. However, the company still plans to add locations in other markets as demand dictates.

XPO recently announced a new bridge loan to fund the deal. It plans to issue $585 million in a private notes offering and will obtain $400 million in term loan debt. Those facilities will be used to repay the bridge and refinance other debt.

Harik said debt leverage will increase from 2.2 times trailing adjusted earnings before interest, taxes, depreciation and amortization at the end of third quarter to the low-3x range. The company expects to deleverage the balance sheet in time and hit a longer-term target of maintaining investment-grade debt ratings.

The deal is expected to be accretive to adjusted EBITDA but dilutive to adjusted earnings per share in 2024. In 2025, the deal is expected to be accretive to adjusted EPS.

Harik doesn’t believe the capacity additions will create an imbalance in the market. He said the company is already covering 99% of all zip codes and noted that most of the new terminals are going into an existing market as a relief valve or to accommodate market share wins. The efficiency gains are expected to far outweigh modest increases in depreciation or lease expenses.

XPO plans to close on the transaction before the year ends.


“This lets us run more efficiently with a better cost structure and importantly better service [while] being able to capitalize on any type of freight upswing from a demand perspective,” Harik said.

More FreightWaves articles by Todd Maiden

One Comment

  1. Freight Zippy

    Here is a well managed, lean, flexible company.
    If this were a teamster operation adding this many terminals would create chaos for the company & their customers.
    Yellow’s death gives life to other carriers..
    No one misses Yellow any more….

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Todd Maiden

Based in Richmond, VA, Todd is the finance editor at FreightWaves. Prior to joining FreightWaves, he covered the TLs, LTLs, railroads and brokers for RBC Capital Markets and BB&T Capital Markets. Todd began his career in banking and finance before moving over to transportation equity research where he provided stock recommendations for publicly traded transportation companies.