XPO, Inc. (XPO)

XPO hauls less-than-truckload freight — shipments too small for a full lorry, consolidated at terminals.

The model differs from ordinary trucking: freight from several shippers is gathered at a terminal, sorted and moves on together. Hence the terminal network as the main asset: its layout determines how many days a shipment takes and how many times it must be rehandled.

The industry's key metric is the operating ratio, the share of revenue consumed by costs; improving it by a point is very expensive and takes years. The company went through spinning off non-core lines to concentrate on this one. Risks: industrial production, driver labour costs and excess capacity in the market. The company pays no dividend.