LOS ANGELES (Reuters) - XPO Logistics Inc on Thursday said price increases on less-than-truckload shipment contract renewals decelerated in the first quarter, sending shares in the shipping and warehousing company down as much as 9.4 percent on Thursday.
The news comes as Connecticut-based XPO is fighting to replace significant revenue from its top customer, Amazon.com Inc, which moved in-house $600 million worth of business with XPO.
Less-than-truckload handles relatively small freight shipments and is the biggest piece of XPO’s core transportation business, accounting for 44 percent of that unit’s first-quarter revenue of $2.66 billion.
“Our price increases on contract renewals were 3.7 percent... down from 4.9 percent in the fourth quarter. So there is some deceleration of the contract renewals. We’re going to have to watch that,” Matthew Fassler, XPO’s chief strategy officer, said on a conference call with analysts on Thursday.
“We actually have some catch-up to do. Our competitors have been raising rates faster than we have,” Fassler said.
XPO built its less-than-truckload business with the purchase of trucking company Con-way for $3 billion in 2015.
Large U.S. trucking companies are reporting mixed results as shipping prices cool from last year’s record growth.
XPO in February disclosed that its largest customer canceled two-thirds of its business with the company, forcing it to cut its 2019 profit forecast for the second time in two months.
Current and former XPO employees, as well as industry insiders, have told Reuters that the customer was Amazon, which is spending billions of dollars to build its own transportation infrastructure to contain swelling shipping costs. XPO and Amazon have declined to comment.
XPO management has been under pressure from hedge-fund manager Spruce Point Capital Management, which in December accused the company of hiding losses through aggressive accounting and criticized its use of acquisitions for growth. XPO called the report “intentionally misleading, with significant inaccuracies.”
XPO since has decided to favor stock repurchases over acquisitions.
In March, XPO terminated Chief Operating Officer Ken Wagers, a former Amazon logistics and transportation executive, after eliminating his position.
When XPO hired Wagers in April 2018, his task was to “lead operations and help with the integration and optimization of future acquisitions.”
The company is also recruiting a chief financial officer to replace John Hardig, who stepped down in August.
Shares in XPO were down 4.7 percent at $63.99 in midday trading after earlier falling to $60.87.
Reporting by Lisa Baertlein in Los Angeles; Editing by Dan Grebler and Lisa Shumaker