XPO pushed profitability higher in the third quarter even as freight stayed soft, lifting adjusted EPS to $1.07 on $2.11 billion of revenue and trimming its North American LTL adjusted operating ratio to 82.7%—a 150-basis-point improvement year over year. Under the hood, shipments per day fell 3.5% and tonnage per day slipped 6.1%, but yield excluding fuel rose 5.9%, pointing to continued pricing discipline and mix gains. Versus expectations, the company topped consensus on both revenue and EPS, underscoring resilient execution amid a stubborn downcycle.
Management credited “profitable share” wins in the local channel and productivity improvements—supported by XPO’s AI-enabled planning tools—for the margin step-up, noting an eleventh straight quarter of sequential growth in revenue per shipment excluding fuel. For operators, that combination matters: it suggests service-led pricing power and better terminal and driver utilization can more than offset light volumes.
Markets took notice. Shares moved higher in early trading as investors weighed an earnings beat against what leadership still calls a prolonged freight recession. The message from the C-suite: demand is not roaring back yet, but the cost and service levers they control are widening margins now—positioning the network for operating leverage whenever volumes normalize.
The peer tape helps frame the result. Saia, which also reported on October 30, posted a Q3 adjusted operating ratio of 87.6% with revenue essentially flat year over year. Different networks and footprints, but the contrast highlights that XPO’s self-help—pricing, mix and productivity—has created room to expand margins even before a clear freight upturn.
Beyond North America, XPO’s European segment grew revenue to $857 million but swung to a small operating loss, a reminder that cross-border shippers may still face uneven performance by region. Companywide, cash generation was solid: $371 million of operating cash flow in the quarter, $150 million of net capex, $335 million in cash on hand, plus $50 million in share repurchases and a $50 million term-loan paydown. One asterisk on reported results was a $35 million legacy legal charge tied to a pre-acquisition Con-way subsidiary, which weighed on GAAP income but not the adjusted figures most carriers and investors use to benchmark operations.
Why it matters for fleets and shippers: Q3 shows that carriers with high service reliability, disciplined pricing and tighter control of linehaul and labor scheduling can print better ORs without help from the cycle. For buyers of LTL capacity, the takeaway is that networks investing in AI-driven dispatching, terminal throughput and local-account growth are likely to hold price even as volumes lag—though they’ll also be first to scale when industrial demand turns. Analysts’ scorecards back that execution: XPO outperformed estimates on OR and key operating KPIs like shipments per day and revenue per hundredweight.
Looking ahead, management struck a cautiously constructive tone, pointing to the margin “runway” their model still has as service and productivity gains compound, and to a potentially more favorable macro backdrop heading into 2026 if rates ease and manufacturing stabilizes. For now, the playbook is clear: win locally, price for value, automate the grind—and let the operating ratio do the talking.
Sources: FreightWaves, XPO, Barron’s, Zacks, Benzinga, Saia
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