XPO Logistics Inc. has sold its North American intermodal business to STG Logistics Inc. for approximately $710 million, continuing to streamline the XPO business while making STG an integrated containerized logistics company.
This follows on XPO’s announcement earlier this month that it was planning to divest its intermodal business and its European business, and spin off its tech brokerage from its LTL business, to focus on “pure play” less-than-truckload.
It's the latest move in XPO's efforts to streamline its business after several years of building a logistics giant through rapid-fire acquisitions. A little more than two years ago XPO announced it was looking into the sale or spin-off of one or more business units — anything but the core less-than-truckload business — because the company’s stock wasn’t performing as well as it should.
“This divestiture simplifies our business model and moves our capital structure closer to investment-grade — two priorities in our strategic plan to unlock significantly more value for our stakeholders,” said Brad Jacobs, chairman and CEO of XPO Logistics, in a news release. “We’ve completed a key step in preparing for our planned spin-off, when we’ll separate XPO into two publicly traded leaders in less-than-truckload transportation and tech-enabled brokered transportation services.”
The intermodal unit, which XPO has reported as part of its Brokerage and Other Services segment, generated $1.2 billion of revenue in 2021. The divested operations provide rail brokerage and drayage services; 48 locations and approximately 700 employees have transferred to the buyer in the transaction.
STG Logistics + XPO Intermodal
STG Logistics is a major provider of facilities-based containerized logistics services, including container deconsolidation, reconsolidation, transloading, warehousing, and outsourced transportation solutions including final-mile delivery. The purchase of one of the largest providers of container transportation services in North America means that “the STG network will be able to handle a container from the instant it’s ready at a port or customer facility to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a single source of accountability,” explained STG CEO Paul Svindland, who will continue to lead the company.
The combined company will go to market as STG Logistics, led by Svindland and STG President and CFO Geoff Anderman. Current STG COO Todd Larson will lead the legacy STG operations as EVP of STG and COO of STG’s Distribution segment. Paul Smith, formerly president of XPO’s intermodal division, will lead STG’s intermodal operations as EVP of STG and COO of STG Intermodal.
“I could not be more excited about this game-changing acquisition,” said Svindland. “We are combining STG’s leading position in facility-based container logistics with XPO Intermodal’s leading position in container transport, creating a platform with unparalleled capabilities.”
The XPO intermodal division acquired by STG is North America’s third largest provider of containerized transportation services, according to the announcement, providing intermodal drayage and rail brokerage services for retailers, manufacturers, third party logistics providers, and other types of customers. The network features 48 locations, 11,000 containers, 2,200 tractors, and 5,200 chassis. The division was formed through XPO’s purchase of Pacer in 2014 and Bridge Terminal Transport in 2015.
“The combination of STG and the intermodal division of XPO creates a truly unique business in containerized logistics," said Paul Smith, incoming COO of STG Intermodal. "This transaction will also allow us to expand our intermodal franchise as well as our scope of services in an aggressive way, which will present numerous exciting new opportunities for the entire team.”