At the cutting edge of tech-led logistics

ARGUABLY NO company embodies the trend towards modern, tech-led third-party logistics companies better than GXO Logistics.

It has been an electric few years for the global logistics giant. First, GXO spun off from XPO Logistics as recently as the summer of 2021, to become perhaps the largest pure-play contract logistics provider in the world.

And last October, GXO completed the acquisition of Clipper Logistics in a deal worth close to £1bn, building on GXO’s position in the retail sector. The acquisition strengthened GXO’s returns and repairs capabilities, expanded its eCommerce customer base, and bolstered its presence in key geographies, including Germany.

GXO UK & Ireland managing director Gavin Williams explains: “This is an exciting move for us as we have admired Clipper as a competitor for a long time.

“There are a number of areas where Clipper have more scaled and developed offerings compared to us, and the opportunity for us will be pouring our customer base into those areas of expertise.

“These include returns, where Clipper has a very well developed offering. In addition, it has a well developed engineering team who can carry out repairs of consumer electronics, for example. Clipper also has a significant footprint in Germany, which we lack. So it gives us an interesting route into that market.”

What’s more, the 3PL announced late last year that it is deploying more robotics innovation and technology to support customers than in any other quarter in its history. By year end, GXO had approximately 7,600 pieces of technology operational in customer sites around the globe, including cobots and robots, vision scanners, AGVs and goods-to-person robots — up more than 50% over the previous year. 

With more than 30% of its revenue derived from automated sites, versus a 5% average for the industry, GXO is a leader in providing automated warehouse solutions.

This tech-led approach was particularly useful for GXO in coping with the recent Peak in the UK.

GXO retail business director Peter Fuller explains: “In general terms Peak went well, operationally, across the business. We didn’t have any particular hot spots, where activity was outstripping resource and we had to mobilise rescue missions.

“It was very well controlled, and because of the service relationship we have with our clients, that was a major tick in the box for us.”

Back in December GXO and retailers had a plan of attack that would spread the promotions through Peak, and in doing that, ensured they were not stretched, delivering lower cost to serve and more stock sold at full margin. When customers choose to phase volume, tech tends to come into its own, and can soak up the consistent volume, operating at the same pace, every day, every hour.

Peter adds: “The plan was to sell the same amount across a broader timeframe and I think that is what happened broadly.”

This flattening effect was not particular to this year. It’s part of a long term trend.

Gavin explains: “Ten years ago, Black Friday produced an enormous peak that required the sector to hire lots of temporary staff to work very quickly over a short period of time to cope. Since then, 3PLs and their retail customers have been working together to spread the Peak and the workload. Investments in modular tech have also played a part in allowing us to spread the Peak.”

The use of tech has been a game changer for GXO. 

Gavin continues: “The fact that automation now can be modular, cheap to implement, and fast to have an impact, makes a big difference. Some 32% of our operations are assisted by technology so we believe we have a lot of potential to grow this.

“The next step will be data and analysis tools, creating a bigger and faster brain, that allows us to drive decision making through gathering data and processing it quickly to gain insights. We see a number of start ups making real progress in this field, and we feel this will be the next step.

“It will help companies analyse operations, and assess with accuracy, where, for example, AMRs would most help them.”

Peter picks up the baton on modular automation, emphasising how easy it is to get it moving.

“The bulk of clients are interested in modular tech deployments,” he says. “These work with minimal interfaces, and with the WMS we have universally deployed.

“We can integrate it easily with our WMS and standard mechanical handling equipment. IT integration is a big issue for larger scale automated operations, but we are finding modular robotic tech easy to deploy and integrate. We are beginning to treat it like MHE without the people.”

People first

Staff shortages are not the issue they were a year ago, where many companies were struggling to fill roles. The focus for GXO recently has been on finding the right talent.

Peter explains: “We’ve found labour quite readily, generally speaking. It goes back to the point about phasing of the volume of orders, so instead of having to recruit big numbers for a short number of weeks, we’ve recruited several thousand people over a longer period. This way we retain the skillset and don’t have to suddenly let people go or bring them in. We look after people well, so the rate of churn has not been a problem.”

As well as managing tech and labour, a key requirement for customers is environmental performance, and it is interesting to hear how emphatic GXO are on how important it is.

Gavin says: “It is very important, it’s one of two topics, with the other being tech, that is present in every customer conversation. We haven’t noted any cynicism or scepticism on this.

That said, there are practical considerations. For example, we have a very large portfolio of properties under management and they vary from modern stare-of-the-art facilities to older properties. However, we do intend to roll out LED lighting throughout the property portfolio.”

Peter adds: “There is so much that comes into it. It covers packaging, trying to find environmentally friendly ways of importing product, fuel types, and how you get capacity with vehicles on the road.”

The GXO Leadership Forum in October took place after spinning off from XPO Logistics in August 2021, and finalising the acquisition of Clipper in early October and provided GXO with an opportunity to catch up.

Gavin concludes: “The main message to come out of the forum was resilience. There is a lot of economic uncertainty among customers, and uncertainty about what levels of spend consumers will have. But we have been here before, Brexit brought a lot of change and uncertainty, and it showed that we are resilient and can cope with the challenge of change.”

For more information, visit www.gxo.com