Home Depot Considered Acquiring XPO Logistics To Counter Amazon

Reports indicate that Home Depot has been holding internal discussions in the recent past with a view to acquiring XPO Logistics, a publicly traded firm with a market capitalization of about $9 billion. XPO offers delivery, transportation as well as other logistics services. According to sources one of the reasons motivating Home Depot to consider the acquisition is to prevent Amazon from getting its hands on the logistics company. Home Depot believes the online retail giant has at one point also considered acquiring XPO Logistics. Some of XPO’s customers include both Amazon and Home Depot.

Though XPO offers various freight transportation and logistics services, consumers know it as the firm that makes the last mile delivery of bulky and heavy items including appliances and furniture. XPO actually bills itself as the biggest provider in North America of last-mile logistics services for heavy goods.

Counter strategy

Earlier in the year there were reports that Amazon was eyeing XPO Logistics as one of the firms it would partner with as it made a big foray in selling furniture. In the last couple of years, the online retail giant has increasingly assumed more control over its logistics. This has seen the Seattle, Washington-based e-commerce giant acquire shareholding in cargo airlines. It has also begun handling more deliveries itself besides leasing truck trailers numbering in the thousands.

In spite of that, the costs of shipping and fulfilment continue to weigh Amazon down as those expenses are rising faster than revenues further increasing the likelihood of the online retail giant wanting to have more control over its supply chain.

“All in, we believe it is likely Amazon will make a concerted effort to take over ever larger portions of its supply chain. However, a full-blown Amazon parcel delivery operation would likely take years to complete,” wrote Mark Mahoney, an analyst at RBC Capital Markets, in a report released earlier this year.

Explosive growth

Two years ago XPO Logistics acquired Con-Way, a trucking firm, at a price of $3 billion. This gave the logistics company a big fleet thereby increasing the scale of freight transportation services it could offer.

Currently the logistics department of XPO has 4,000 permanent workers but hires many more during peak seasons. During this year’s festive season and in the face of growth of e-commerce, the firm hired approximately 6,000 seasonal workers during the holiday shopping period. This is a sign of explosive growth as during last year’s festive season it only hired 1,000 extra workers.

Leave a Reply

Your email address will not be published. Required fields are marked *