Interview background and participants

Logistics Management Group News Editor Jeff Berman interviewed Ali Faghri, Chief Strategy Officer at XPO, the Greenwich, Conn.-based national less-than-truckload (LTL) carrier. The conversation reviewed the state of the LTL market, economic influences, trade policy, XPO’s investments and how the company is applying artificial intelligence.

Current state of the freight economy

Faghri describes the freight economy as soft, with LTL volumes remaining well below pre-pandemic levels. He attributes that weakness to a sluggish industrial economy, which supplies much of LTL’s customer base. He said a recovery in industrial manufacturing — potentially supported by lower interest rates and legislation such as the Big Beautiful Bill — would drive a rebound in LTL volumes.

Tariffs and U.S. trade policy impact

Faghri said tariffs should ultimately act as a long-term tailwind for LTL by encouraging manufacturers to move production to the United States. When factories relocate domestically, both raw materials and finished goods travel on U.S. trucks rather than only the final product.

He added that domestic production shortens cycle times because manufacturers seek to move inventory quickly to free up working capital, producing smaller, direct shipments that fit the LTL model. Greater clarity on tariff policy, he said, should accelerate reshoring trends as shippers regain confidence to invest.

Differences between the pandemic surge and the current downturn

Faghri contrasted the early 2020 pandemic period — a sharp decline followed by a dramatic rebound that overwhelmed capacity — with the present freight recession. The current downturn has been more prolonged and has driven additional capacity out of the industry, he noted.

He warned that when industrial activity returns and volumes increase, only a short list of carriers will have the capacity to handle the surge.

XPO investments and capacity positioning

Faghri emphasized that XPO has invested through the downcycle to prepare for a market recovery. He highlighted several specific moves the company has made to ensure capacity and service readiness

• Maintained roughly 30% excess door capacity, which he described as the appropriate level at the bottom of the cycle
• Opened more than two dozen new service centers in key freight markets
• Built over 18,000 new trailers at XPO’s in-house manufacturing plant since late 2021
• Added nearly 6,000 tractors, producing the company’s lowest fleet age ever

Those investments, he said, position XPO to support customers when demand recovers and the industry faces another capacity crunch.

E-commerce influence on LTL demand and service expectations

Faghri said e-commerce has created new demand for LTL while raising transit-time expectations among shippers and consumers. Retailers have redesigned distribution networks to handle smaller, more frequent shipments and now require speed, precision and end-to-end visibility.

He said XPO’s network, technology and service capabilities align with what e-commerce shippers need, and the company has benefited from this structural shift.

Preparation for NMFC changes

When the National Motor Freight Classification (NMFC) changes were proposed, XPO focused on helping customers transition smoothly through education and process updates. Sales teams met with customers to review freight mixes, discuss potential classification shifts and reinforce packaging and bill-of-lading best practices.

XPO also updated internal processes by adding a freight sub-item number section to its BOL template and integrating the NMFTA’s ClassIT+ tool into its website so customers could determine NMFC item numbers, density and class. Faghri said the changes produced a smooth transition for customers and staff.

Outlook for the 2025 peak season

Faghri described the holiday peak as critical for many retail shippers, where on-time, damage-free delivery leaves little margin for error. He said XPO saw strong demand for its Premium Services this peak season as retailers and shippers sought guaranteed timelines and extra support.

He cited specific offerings shippers used to meet seasonal needs

• Rollout Service to place seasonal displays in stores
• Grocery Consolidation Delivery to stage freight in grocery warehouses before holiday demand

These services provide priority handling, dedicated support and improved on-time performance for high-stakes shipments, he said.

LTL pricing and service quality trends

Faghri called the pricing environment constructive. He noted that LTL is a cost-inflationary business and customers recognize the need for carriers to invest in labor, network, equipment and technology to maintain service.

He added that the industry remains capacity-constrained, with fewer terminals and doors than before the pandemic, which reinforces shipper demand for reliable carriers. In a soft-demand market, he argued, service quality becomes an even greater competitive differentiator.

XPO has focused on improving service by deploying new field tools to secure freight, enhancing loading training and creating incentive programs tied to quality targets. In the third quarter of 2025, the company reduced damages to its best level ever and recorded its 14th consecutive quarter of on-time performance improvement, he said.

What shippers are asking from carriers and XPO solutions

Shippers, Faghri said, want carriers that act like an extension of their teams: consistent, damage-free and on-time service, plus the ability to solve complex logistics problems. Over the past year XPO has seen rising demand for its Premium Services, which include Retail Solutions, Rollout Service, Grocery Consolidation Delivery and enhanced cross-border transport with XPO Mexico+.

He said those services, backed by XPO’s network and teams, address a wide range of shipper challenges.

How XPO is applying AI across operations and sales

Faghri said artificial intelligence is reshaping LTL operations and that XPO’s fully cloud-based technology stack lets it deploy proprietary AI faster than many rivals. He described several operational impacts

• AI models reduce diversions and empty miles, improving freight flow through the network
• Productivity gains across linehaul, pickup-and-delivery and dock operations

On the commercial side, XPO built an AI-driven lead-scoring tool that analyzes hundreds of thousands of potential shippers to identify the best fits, and a scheduling tool that optimizes routes for salespeople who spend most of their time on the road. Faghri said XPO expects AI’s role in operations and customer service to expand in the coming years.