LOS ANGELES (Reuters) - XPO Logistics Inc (XPO.N) Chief Executive Bradley Jacobs on Tuesday said U.S. consumer spending was still strong and continued to offset an industrial sector transportation “recession” spawned by President Donald Trump’s trade war with China.
U.S. manufacturing activity tumbled to a more than 10-year low in September, hurt by the Washington-Beijing tariff battle that Trump started early last year.
“We have been in an industrial recession for the last year,” Jacobs said on a conference call with analysts. “Consumer is still strong, but the rest of the economy has not been so hot for quite a while.”
It took two or three quarters for the new U.S. tariff policies to ripple through the economy, Jacob said.
“Then ... people started seeing the effects. So that’s been building up. And now you see in the business,” he said.
The comments from the transportation and warehousing CEO echo those from truck and railroad executives, who are reporting shipping volume declines from big manufacturers and other industrial companies.
Robust U.S. consumer spending supports e-commerce companies, which are the biggest contributors to Greenwich, Connecticut-based XPO’s business.
“The consumer is still healthy here in the fourth quarter,” Jacobs said as online and brick-and-mortar retailers prepare for the key winter holiday shopping season.
XPO said it is winning new e-commerce business and squeezing costs via automation as it recovers from losing two-thirds - or $600 million - of its business from its largest customer, identified by employees and experts as Amazon.com Inc (AMZN.O).
On Tuesday, XPO reported a bigger-than-expected 15.8% jump in third-quarter net income attributed to common shareholders. But revenue fell 4.2%, prompting the company to slash its full-year revenue forecast. It now expects a 2019 revenue decline of 2.5%-4.0% versus its previous forecast of up 1% to down 1%.
“A big chunk of that was the downsizing of our largest customer, which is not all over with, so we’re going to see some more pressure there going forward,” Jacobs said.
XPO shares were down 1.1% at 79.49 in morning trading.
Reporting by Lisa Baertlein in Los Angeles; Editing by Steve Orlofsky