The company, which recently reported the best third-quarter operating ratio in 30 years for its LTL unit, expects to generate about $100 million in incremental operating profit over the next two years from proprietary technology underlying LTL 2.0:
• Linehaul bypass model. The company is piloting new algorithms to assemble truckloads dedicated to direct movements of LTL freight. The linehaul bypass model improves the efficiency of company trucks and trailers and purchased linehaul services by reducing multiple stops to a single destination.
• Load-building through artificial intelligence. AI tools and computer vision technology for cross-dock operators help to ensure that inbound pallets are loaded in the optimal trailers and in the right sequence inside the trailers for the greatest possible efficiency during delivery. Intelligent load-building technology also helps limit damage.
• Pricing algorithms. The company is developing machine-learning capabilities to predict LTL price elasticity. The technology is being designed to forecast market conditions for future dates based on real-time supply and demand, as well as historical data and XPO capacity levels. This will help enhance the speed and accuracy of responses to customer RFPs.
Mario Harik, chief information officer of XPO Logistics, said, “Our technology is spurring growth across all the services we offer. We’ve pinpointed four high-impact areas where we can lead the LTL industry in transforming traditional approaches to serving customers. Two of these innovations — dynamic route optimization and linehaul bypass — are already in pilot. Given our capacity for innovation, our opportunity for creating value in LTL is nearly limitless.”
XPO said it develops its technology within a proprietary, cloud-based ecosystem, supported by an annual investment of more than $450 million. Other recent innovations in XPO’s global operations include the deployment of intelligent robots in warehouses; the XPO Direct shared-space distribution network; voice integration with Amazon and Google to track home deliveries of heavy goods; and the launch of the XPO Connect digital freight marketplace with the Drive XPO mobile app for carriers.