FreightWaves 3PL Summit: Brad Jacobs On Diversity, Automation And COVID Recovery

Brad Jacobs, chairman, and CEO of XPO Logistics XPO, is committed to improving the diverse culture XPO is striving to build for its employees, but doing so requires listening to employees, he said during the keynote address of FreightWaves' Virtual 3PL Summit on Tuesday morning.

"There is a problem in the country [with] racial inequality and that's a fact," Jacobs said. "I think just in the last month, the recognition of that fact has become much more widespread."

Racial equality was one of the many topics Jacobs addressed during a nearly 50-minute live question-and-answer session. He also addressed potential mergers and acquisitions, company culture, automation, and autonomous trucks.

Jacobs was asked questions from a diverse group of industry leaders, including Craig Fuller, CEO of FreightWaves; Ben Gordon, founder and managing partner of BG Strategic Advisors; David Dolan, managing director of DC Advisory US; John Larkin, operating partner of Clarendon Capital; Karl Kirkeby, senior vice president of Jefferies; Kevin Nolan, founder of Nolan Transportation Group; Lidia Yan, CEO of NEXT Trucking; Lori Heino-Royer, ambassador CEOX; Matt Waller, dean of the Sam M. Walton College of Business at the University of Arkansas; George Abernathy, president of FreightWaves; and Anthony Smith, economist for FreightWaves.

The live question-and-answer town hall was the opening session of FreightWaves 3PL Summit, presented by Hubtek. TriumphPay is the universal sponsor and regional sponsors include Lean Staffing Solutions, Loadsure, and Truckstop.com.

The questions were not pre-screened, so Jacobs' answers were spur-of-the-moment responses. He likely knew that diversity would be a topic, however, and one of the first questions on the topic came from Heino-Royer.

Jacobs explained that XPO is trying to build a culture in which employees feel they can speak up, and it has held a number of town halls, some led by Jacobs himself, with minority employees. He said the employees were honest and every Black member of the company had experienced racism in their lifetimes.

"We heard stories, and they were painful, and they were sincere," he said. "And a lot of emotion and tearing up and, for me, they were very impactful. There is a lot of work to do."

XPO is hiring a chief diversity officer who will hold a senior vice president-level title, Jacobs said, and he promised to "increase the pipeline of diverse candidates." That may mean changing the criteria for applicants he said, to eliminate college degrees for positions where they may not be a necessity.

"We're also going to increase the mentoring and promotion of the careers of all our employees [including Hispanic and Black employees]," Jacobs added.

Acquisitions on the horizon?

XPO is known for its aggressive acquisition approach – the company has made 17 acquisitions during Jacobs' tenure – and that will continue, maybe.

"I like M&A," Jacobs said in response to a question from Gordon. "I think there are opportunities in M&A, particularly in the pandemic era. Will we buy something, I don't know."

In 2019, XPO was said to be looking and Jacobs confirmed the company is still on the hunt, but any deal must make strategic sense and increase shareholder value.

"There has to be a strategic reason, there has to be a well-thought-out plan for what you are going to do after the acquisition, and there has to be shareholder value," Jacobs said.

When asked by Fuller what he was most proud of during his tenure leading XPO, Jacobs didn't hesitate.

"I'm most proud of the culture we've created and… over the past decade, we are the seventh-best performing stock in the Fortune 500," he said. "We powered it all by investing in technology before technology was cool and we're reaping the benefits of that technology."

Jacobs added that XPO continues to focus on how to keep employees safe and how it is positioning itself for the future. That includes a heavier focus on verticals such as e-commerce and increasing the use of technology such as robots and machine learning.

Automation is changing logistics

"The future is more and more automation; that's a trend among the industry, and around the world," he said.

A number of questions focused on COVID-19 and how it is altering the landscape, especially from the technology standpoint.

"The evolution of innovation and automation in the warehouse [space] has really impressed me because it improves [satisfaction among customers and employees]," Jacobs said in response to a question from Yan.

He said XPO is working with Nestle in Europe on a "warehouse of the future," with suppliers offering technologies and XPO contributing the software that will connect these disparate systems. A similar project was scheduled to go live in the U.S. this month but has been delayed due to COVID-19. The software, Jacobs said, will be open-sourced.

As to autonomous trucks, Jacobs said there is no doubt they are coming; the question is when? He said the technology won't be the question, it will be the regulations that govern their operation, but autonomous trucks are too efficient not to become a reality.

Jacobs also said that COVID-19 has only reinforced his view of technology, and shown that automation, machine learning, and artificial intelligence will play key roles in logistics moving forward. Among the areas, he sees evolving because of technology is pricing.

Outsourcing trends

COVID-19 has also accelerated the pace of manufacturers outsourcing their logistics, Jacobs said. One large customer he spoke with is looking to close 20% of its brick-and-mortar stores and shift more business to e-commerce.

"They need our help to run that in a very smooth way," Jacobs said.

Near-term, Jacobs is cautious about the economy but is very bullish long-term he said.

"The pandemic is going to be over," Jacobs said, noting that the role governments have played in supporting the economy is "100-fold" over what was done during the financial crisis of 2007-2008.

"We're closer to it being over now than we were a few months ago and… once it's behind us people are going to be so excited to get out there and be creative and energetic" and interact not just in cyberspace.

"When we finally let loose and we're back in the office and we're back working together without fear of getting sick, I'm very [excited]," Jacobs said.

Click for more FreightWaves articles by Brian Straight.

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