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XPO Positioned to Beat Q2 Tonnage Guidance as Industrial Activity Strengthens

Less-than-truckload carrier XPO is tracking ahead of its second-quarter tonnage outlook. May daily shipments rose 0.3 percent, though a 2 percent headwind offset gains. The carrier's focus on small and medium-sized shippers is driving margin expansion. April tonnage declined 1 percent, but June faces a more favorable year-ago comparison at negative 8.9 percent. This positions XPO to potentially exceed guidance calling for flat year-over-year tonnage. Manufacturing activity expanded for a fifth consecutive month in May, with the Institute for Supply Management's Manufacturing PMI reaching 54, its highest level in four years. The new orders subindex climbed to 56.8, signaling sustained future demand. XPO achieved contractual rate renewals in the mid- to high-single-digit range during Q1 and expects Q2 yields to come in comfortably ahead of first-quarter gains.