STG Logistics Buys XPO’s Intermodal Arm for $710M

Port facility. Image courtesy of PostcardTrip via Pixabay.com

STG Logistics has acquired XPO Logistics‘ intermodal division, the third-largest provider of containerized transportation services in North America, in an all-cash transaction totaling approximately $710 million. The acquisition further solidifies STG’s position as North America’s leading containerized logistics services provider.

While the transaction does not change STG’s position at the top, it does give the company a stronger foundation. STG is a leader in facility-based container logistics, while XPO’s intermodal division is a shining star in container transport.

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“We have a presence at every single major U.S. port,” Drew Wilkerson, president, transportation, North America, with XPO Logistics, said during the company’s fourth quarter 2021 earnings call on February 9, 2022. “It was a strong performer for us in the fourth quarter [of 2021].”

The transaction will add the 48 locations from XPO’s intermodal division to STG’s nationwide portfolio, which encompasses 28 U.S. port locations, which are driving the industrial sector, totaling more than 5 million square feet. Once combined, the STG network will be able to handle a container from the instant it’s ready at a port or customer facility to the moment each individual shipment arrives at its final destination, all the while providing customers full visibility and a single source of accountability, Paul Svindland, CEO of STG Logistics noted in a prepared statement.

Opportunity knocking

According to a December 2021 survey published by Container xChange, global container logistics players, sidelined by the pandemic and other issues impacting the industry, entered 2022 with a dour perspective on the supply chain performance. Of the total respondents to the survey, 65 percent expected performance to either deteriorate or remain the same this year.

However, 2021 proved a highly profitable year for the shipping industry, which, as Johannes Schlingmeier, CEO of Container xChange said in prepared remarks, allows for an opportunity to improve service levels across the industry.

STG’s acquisition of XPO’s intermodal arm appears to dovetail with the concept of improved service levels, as the marriage will only bolster the company’s offerings of seamless port-to-door containerized logistics services. The services will further address a concern of 6 percent of respondents to the Container xChange survey, who listed the lack of transparency and visibility into the supply chain as one of the major challenges in the industry.