What changed in this filing

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Item 1. Business

2024-02-15 compared with 2023-02-16 · 52 added, 95 removed, 98 unchanged (60% of the section changed)

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GXO Logistics, Inc., together with its subsidiaries (“GXO,” the “Company,” “our” or “we”), is the largest pure-play contract logistics provider in the world and a foremost innovator in an industry propelled by strong secular tailwinds.

We provide our customers with high-value-add warehousing and distribution, order fulfillment, e-commerce, reverse logistics and other supply chain services differentiated by our ability to deliver technology-enabled, customized solutions at scale.

As of December 31, 2022, our approximately 135,000 team members operated in 979 facilities worldwide totaling 197 million square feet of space, primarily on behalf of large corporations, that have outsourced their warehousing, distribution and other related activities to us.

We provide our customers with high-value-added warehousing and distribution, order fulfillment, e-commerce, reverse logistics and other supply chain services differentiated by our ability to deliver technology-enabled, customized solutions at scale.

As of December 31, 2023, our 131,000 team members operated in 974 facilities worldwide totaling 199 million square feet of space, primarily on behalf of large corporations that have outsourced their warehousing, distribution and other related activities to us.

Our revenue is diversified among over one thousand customers, including many multinational corporations, across numerous verticals.

Our customers rely on us to move their goods with high efficiency through their supply chains — from the moment inbound goods arrive at our logistics sites, through fulfillment and distribution, and the management of returned products.

Our customers rely on us to move their goods, with high efficiency, through their supply chains — from the moment goods arrive at our warehouses through fulfillment and distribution, and the management of returned products.

Our customer base includes many blue-chip leaders in sectors that demonstrate high growth and/or durable demand, with significant growth potential through customer outsourcing of logistics services.

GXO became a standalone publicly traded company on August 2, 2021, when GXO Logistics, Inc.

completed its separation (the “Separation”) from XPO, Inc.

GXO became a standalone publicly traded company on August 2, 2021, when GXO completed its separation (the “Separation”) from XPO, Inc.

(“XPO”) and began regular-way trading on the New York Stock Exchange under the ticker symbol “GXO.” GXO was incorporated as a Delaware corporation in February 2021.

On May 24, 2022, the Company completed the acquisition of Clipper Logistics plc (“Clipper”), an omnichannel retail logistics specialist based in Leeds, England (the “Clipper Acquisition”).

See Item 8 of Part II, “Financial Statements and Supplementary Data — Note — 4 Acquisitions” to the Consolidated Financial Statements for additional information.

Drivers of Value Creation

GXO Operates in a Massive Market that is Growing Rapidly Due to Strong, Secular Tailwinds.

GXO is the largest pure-play contract logistics provider in the world.

Our significant scale makes us well-positioned to benefit from the logistics industry’s predominant tailwinds — the secular shift in logistics toward outsourcing, the growth in consumer demand for e-commerce and omnichannel retail, and the focus on ensuring supply chain resilience that is driving higher inventory levels and nearshoring and re-shoring.

Over the last five years, the outsourced portion of the market has outgrown the broader market.

We expect this outperformance to continue as the benefits of economies of scale and rising technological complexity make the outsourced offering even more compelling.

E-commerce is increasing as a share of overall commerce and will continue to do so.

E-commerce creates demand for a far greater degree of sophistication throughout the fulfillment process, and a compelling revenue-multiplier effect for GXO.

Additionally, more E-commerce also means more returns:

roughly one in three items are being returned in the E-commerce environment based on third party research.

The increased touchpoints mean higher revenue capture for the warehouse provider.

Supply Chain Resilience:

The need to make supply chains more resilient has driven a trend towards holding more inventory – the concept of just-in-case, rather than just–in–time.

Additionally, we expect many industries to follow the trend of pursuing resiliency in their supply chains through near-shoring.

GXO has Strong Competitive Advantages that have Enabled it to Grow Faster than the Broader Market.

Robust Technological Differentiation:

Increasingly, customers want technology-enabled, highly customized solutions that incorporate intelligent automation and data science.

Order fulfillment times are compressing, and

new channels are emerging as companies seek to improve the efficiency, speed and visibility of their supply chain activities, notably in the e-commerce and omnichannel retail channels.

GXO leads the industry in automation levels.

Our focus as an innovator is helping our customers meet the expectations of their customers, with reliable outcomes, more visibility and greater efficiency.

Furthermore, we keep close tabs on innovation and are constantly testing numerous large and small technology opportunities, and our team has a unique and deep understanding of how to deploy this sophisticated technology.

Across core verticals, we see a strong correlation between automation and market share growth, as our technological advantages enable us to offer continuous improvement opportunities to customers over the life of a contract, which is a powerful driver of retention and growth.

Global Scale:

GXO’s ability to serve multinationals around the world is another key driver of our growth.

We have established leading market positions across North America, Western Europe, and the UK, and we have built scale positions across the following, highly attractive verticals – omnichannel retail and consumer packaged goods;

food and beverage;

industrial and manufacturing;

as well as tech and consumer electronics.

Our customer portfolio includes long-term relationships with blue-chip market leaders and world-class brands, including Fortune 100 and Fortune Global 500 companies.

Importantly, scale enables us to continuously learn and improve shared knowledge across our verticals and our large, diversified customer base to create more value.

Trusted expertise:

Our executives have decades of experience in their respective fields and work together to create sustainable value through operational excellence and a purposeful culture.

Our executives foster a company culture that is safe, respectful, entrepreneurial, innovative and inclusive, with a focus on diversity, inclusion and belonging that continues to shape our recruitment efforts and work environments.

We have extensive experience in our core verticals, and we understand the specific requirements for quality control, real-time visibility, special handling, security, complex stock-keeping, time-assured deliveries and agility during surges in demand.

The average relationship tenure for our top 20 customers in 2022, based on revenue, was over 15 years, and our revenue retention rate is above 90% each year.

GXO has a Resilient Business Model with Multiple Drivers of Profitable Growth

High Quality Growth:

First, our long-term relationships, have an average contract and lease term of five years.

Second, our pricing framework is managed through contractual terms and includes escalations for inflation.

Third, our stable revenue base is diversified by customer, vertical and geography, making GXO resilient through different parts of the cycle.

Additionally, no customer represented more than 4% of our total revenue in 2022.

Fourth, our customers are high-quality companies, and the vast majority of our top-100 credit rated customers are Investment Grade.

Continuous Improvement and Productivity:

GXO expects to generate meaningful margin expansion from an increase in large scale automation, further implementation of adaptive technologies, completion of central efficiency projects, and the realization of synergies from the 2022 acquisition of Clipper.

We design and operate the most advanced warehouse solutions in the world.

Our strategy is to help our customers manage their warehouses for optimal efficiency, using our network of people, technology and other physical assets.

Our strategy is to help our customers manage their warehouse needs for optimal efficiency, using our network of people, technology and other physical assets.

We deliver value to customers in the form of technological innovations, process efficiencies, cost efficiencies and reliable outcomes.

Our services are both highly responsive to customer goals, such as increasing visibility in the supply chain, decreasing fulfillment times and mitigating environmental impacts and being proactive in identifying potential improvements.

Our services are highly responsive to customer goals, such as increasing visibility in the supply chain, decreasing fulfillment times and mitigating environmental impacts, while being proactive in identifying potential improvements.

GXO creates short- and long-term value for customers and shareholders through our unique combination of technology, scale and expertise.

Our strategy addresses growth and optimization by focusing on core verticals that demonstrate enduring demand over time and where we already have a deep presence.

We expect to attract new customers and expand the services we provide to existing customers through new projects, thus earning more of their external and internal logistics spend.

We expect to attract new customers and expand the services we provide to existing customers through new projects, thus earning more of their logistics spend.

We integrate best practices to drive productivity, with a focus on automation and other levers of profitable growth.

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Technology and Intellectual Property

Contract logistics is growing more and more complex, as changing consumer expectations and preferences continue to drive a need for faster delivery times, higher levels of returned inventory, and better visibility throughout the supply chain.

Contract logistics is becoming more and more complex, as changing consumer expectations and preferences continue to drive a need for faster delivery times, higher levels of returned inventory and better visibility throughout the supply chain.

Traditional warehousing solutions are no longer sufficient to fill these needs.

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Technology is a core competitive advantage for GXO and fundamental to how we win and retain business.

GXO was an early adopter of technology and operates more than 30% of technology-enabled warehouses compared to the industry average of roughly 8%.

Technology enables us to add value to our customers’ end-to-end operations in terms of cost, efficiency, accuracy, and environmental impact.

GXO was an early adopter of technology, and more than 30% of our warehouses are technology-enabled compared to the industry average of approximately 10%.

Technology enables us to add value to our customers’ end-to-end

operations in terms of cost, efficiency, accuracy and environmental impact.

Investments in cutting-edge technology are a major growth driver for our business.

Our highly scalable platform is built on the cloud to speed the deployment of new ways to increase efficiency and leverage our footprint.

Our highly scalable warehouse management platform is built on the cloud to speed the deployment of new ways to increase efficiency and leverage our footprint.

In a relatively short time, we can implement innovations across multiple geographies or take an innovation developed for one vertical and apply it to other verticals to enhance the value we offer our customers.

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Intelligent Warehouse Automation

Our intelligent warehouse automation includes deployments of autonomous robots and cobots, automated sortation systems, automated guided vehicles, goods-to-person systems and wearable devices — these are all effective ways to deliver critical improvements in speed, accuracy and productivity.

Our intelligent warehouse automation includes deployments of autonomous robots and collaborative robots (“cobots”), automated sortation systems, automated guided vehicles, goods-to-person systems and wearable devices — these are all effective ways to deliver critical improvements in speed, accuracy and productivity.

Importantly, automation also enhances safety and the overall quality of employment.

Our warehouse management system creates a synchronized environment across automation platforms to control these technologies holistically, providing an integrated solution.

We have found that autonomous goods-to-person systems and that cobots, which assist workers with the inventory picking process, can improve labor productivity.

We have found that autonomous goods-to-person systems and cobots, which assist workers with the inventory picking process, can improve labor productivity.

Stationary robot arms can repeat demanding tasks with greater precision than is possible manually.

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Customers and Markets

We provide our customers with high-value-add warehousing and distribution, order fulfillment, e-commerce, reverse logistics and other supply chain services.

We provide services to customers globally, including Fortune 100 and Fortune Global 500 companies in the U.S., European multinational market leaders and other renowned global brands.

We provide our customers with high-value-added warehousing and distribution, order fulfillment, e-commerce, reverse logistics and other supply chain services.

We provide services to customers globally, including Fortune 100 companies in the U.S., Fortune Global 500 companies in the world, European multinational market leaders and other renowned global brands.

The customers we serve are primarily in North America and Europe and operate in every major industry.

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In 2023, our top five customers combined accounted for approximately 17% of our total revenue, and no customer represented more than 4%.

Our revenue is highly diversified due to our expertise across a range of key verticals, reflecting our customers’ principal industry sectors.

In 2022, 41% of our revenue was from Omnichannel retail, 15% from Technology and consumer electronics, 15% from Food and beverage, 12% from Industrial and manufacturing, 10% from Consumer packaged goods and 7% from other industries, with the vast majority of our revenue generated in United Kingdom, United States, France, Netherlands and Spain.

Our revenue is highly diversified due to our expertise across multiple verticals, reflecting our customers’ principal industry sectors.

In 2023, 42% of our revenue was from Omnichannel retail, 15% from Technology and consumer electronics, 14% from Food and beverage, 11% from Industrial and manufacturing, 11% from Consumer packaged goods, and 7% from other industries, with the vast majority of our revenue generated in the United Kingdom, the United States, the Netherlands, France, Spain and Italy.

During the fourth quarter, our business benefits from strong positioning in the e-commerce sector, where demand is characterized by surges in activity associated with the holiday season.

Our revenue and profitability are typically lower in the first quarter of the calendar year relative to other quarters.

This is due in part to seasonality, namely the post-holiday reduction in demand experienced by many of our customers, which leads to less use of the logistics services we provide.

Our business benefits from strong positioning in the e-commerce sector, where demand is characterized by seasonal surges in activity, with the fourth quarter holiday peak typically being the most dramatic.

We operate in a highly competitive global industry with a highly fragmented marketplace where thousands of companies compete domestically and internationally.

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Our competitors include local, regional, national and international companies that offer services similar to those we provide.

Our competitors include DHL, DSV, Kuehne + Nagel International, GEODIS and ID Logistics.

Our competitors include CEVA, DHL, DSV, GEODIS, ID Logistics, Kuehne + Nagel and Ryder.

Due to the competitive nature of our marketplace, we strive daily to strengthen and expand existing business relationships and forge new relationships.

Environmental and Other Government Regulations

Government Regulations

Our operations are regulated and licensed by various governmental agencies in the U.S.

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and foreign laws and regulations, including, but not limited to, the Foreign Corrupt Practices Act and other anti-bribery and anti-corruption statutes.

Moreover, we are subject to various environmental laws and regulations in the jurisdictions where we operate.

Historically, we have successfully resolved potential environmental exposure without a material effect on our business or operations.

We believe that our operations are in compliance with current laws and regulations and we do not know of any existing environmental law, regulation nor condition that reasonably would be expected to have a material adverse effect on our business, capital expenditures, or operating results.

However, future changes to environmental laws or regulations may impact our operations and could result in increased costs.

A number of our sites are ISO 14001-certified to high standards for environmental management, and we have implemented numerous programs to manage environmental risks and maintain compliance in our business.

federal and state governments, as well as governments in certain foreign jurisdictions where we operate, have also proposed environmental legislation that could, among other things, limit carbon, exhaust and greenhouse gas emissions.

If enacted, such legislation could result in reduced productivity and efficiency and increased operating expenses, all of which could adversely affect our results of operations.

Environmental Sustainability

Environmental sustainability is a key pillar of our Environmental, Social, and Governance (“ESG”) strategy.

We are partnering with customers around the globe to help them achieve their environmental goals while we innovate to reduce our impact.

For many of our customers, the logistics component of their supply chain accounts for a sizeable portion of their greenhouse gas (“GHG”) emissions and waste footprint.

We collaborate with customers to create action plans that reduce emissions related to their supply chains through technology-enabled solutions.

Our environmental sustainability strategy is designed to be applicable globally while also compliant with local environmental regulations.

Throughout our business, GXO has identified GHG emissions and waste associated with operations as our greatest opportunities to reduce our environmental impact.

In 2021, we established environmental

targets to track and prioritize our reduction of Scopes 1 and 2 GHG emissions and increase waste diversion rates globally.

Part of our environmental strategy focuses on improving the energy efficiency of our buildings.

We have a global initiative to replace our warehouse lighting with LED and are developing our strategy to increase the amount of renewable electricity used in our buildings.

In 2023, we began an exercise to quantify our full carbon footprint, including our Scope 3 emissions.

We anticipate the results of this exercise in the first half of 2024.

Human Capital

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Employee Profile

As of December 31, 2022, we operated in 28 countries with approximately 135,000 team members (comprised of 89,000 full-time and part-time employees and 46,000 temporary workers engaged through third-party agencies).

Our workforce is located as follows:

42% in the United Kingdom, 30% in Europe (excluding the United Kingdom), 26% in North America and 2% were based in Latin America and Asia combined.

The majority of our employees in Europe and United Kingdom were covered by collective bargaining agreements, while none of our employees in North America were covered by collective bargaining agreements.

As of December 31, 2022, approximately 34% of our global workforce was comprised of women, and 66% of our workforce in the U.S.

As of December 31, 2023, we operated in 27 countries with approximately 131,000 team members (comprising approximately 87,000 full-time and part-time employees and 44,000 temporary workers engaged through third-party agencies).

Our workforce is located:

47% in the United Kingdom, 25% in Europe (excluding the United Kingdom), 25% in North America and 3% in Latin America and Asia combined.

The majority of our employees in Europe and the United Kingdom were covered by collective bargaining agreements, while none of our employees in North America were covered by collective bargaining agreements.

As of December 31, 2023, approximately 36% of our global workforce were women, and 66% of our workforce in the U.S.

were ethnic minorities.

We have made significant investments in the safety, well-being and satisfaction of our employees in numerous areas, including diversity, inclusion and belonging;

We have made and continue to make significant investments in the safety, well-being and satisfaction of our employees in numerous areas, including diversity, inclusion and belonging;

health and safety;

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We welcome employees of every gender identity, sexual orientation, race, ethnicity, national origin, religion, life experience, veteran status and disability.

In November 2021, we appointed a Vice President of Diversity, Inclusion and Belonging and we have launched a Sustainability Steering Committee and Diversity and Inclusion Steering Committee in Europe and the Americas whose strategies include support and contributions for our Environmental, Social and Governance (“ESG”) commitments and ongoing community engagement events.

Health and Safety

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Our employees are critically important to our ability to provide best-in-class service.

We ask our employees for feedback through engagement surveys, roundtables and town halls, and we use periodic engagement surveys to gauge our progress and assess satisfaction.

We ask our employees for feedback through engagement surveys, roundtables and town halls.

We use periodic engagement surveys to gauge our progress and assess satisfaction.

In this way, our employees help drive the continuous improvement of our business.

We seek to identify top talent in all aspects of the recruitment process, and we emphasize training and development supported by our own GXO University.

We seek to identify top talent in all aspects of the recruitment process and we emphasize training and development supported by our own online GXO University.

We tailor our recruitment efforts by geography and job function, using an array of channels to ensure a diverse candidate pool.

Our talent development infrastructure provides resources to employees who aspire to grow throughout their careers, such as tailored skills development, training and mentoring.

Our talent development infrastructure provides resources to employees who aspire to grow

throughout their careers, such as tailored skills development, training and mentoring.

In addition, we maintain a robust pipeline of future operations leaders by using structured sponsorships and additional learning techniques to develop internal candidates who demonstrate high potential to advance from supervisory roles into site leader positions.

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In Europe, the benefits offered vary by country and are tailored to the needs of the local markets.

Examples include comprehensive healthcare and risk insurance, employee assistance programs covering mental, physical and financial wellbeing, pension plans, profit sharing, and local and global bonuses structured to offer competitive pay in each country.

Examples include comprehensive healthcare and risk insurance, employee assistance programs covering mental, physical and financial well-being, pension plans, profit sharing and local and global bonuses structured to offer competitive pay in each country.

Information About Our Executive Officers

The following information relates to our executive officers:

The following information relates to our current executive officers:

Name Age Position

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Karlis Kirsis 44 Chief Legal Officer

Maryclaire Hammond 57 Chief Human Resources Officer

Elizabeth Fogarty 54 Chief Communications Officer

Richard Cawston 50 Chief Revenue Officer

Malcolm Wilson has served as Chief Executive Officer since the Separation in August 2021, after serving as Chief Executive Officer of XPO Logistics Europe since September 2017.

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Kirsis previously served in various roles at XPO, including Senior Vice President, Corporate Counsel from July 2017 to February 2020 and Vice President, Corporate and Securities Counsel from September 2016 to July 2017.

Maryclaire Hammond has served as Chief Human Resources Officer since the Separation in August 2021, after serving as Senior Vice President, Human Resources – Americas and Asia Pacific for XPO’s North American logistics business, a role she had held since September 2019.

Prior to her time with XPO, Ms.

Hammond was employed by Marathon Petroleum Company (formerly Andeavor) as a Senior Human Resources Director from August 2017 to September 2019, and before that as Human Resources Director for BP North America.

Elizabeth Fogarty has served as Chief Communications Officer since September 2021.

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Fogarty was employed by Citi as the Managing Director and Head of Global Consumer Banking Public Affairs from October 2013 to September 2021 and before that as the Director of Corporate Communications and Vice President of Global Public Affairs.

Richard Cawston has served as Chief Revenue Officer and President of Europe since December 2023, after serving as President of Europe for GXO since August 2021 and President of XPO Logistics Europe – Supply Chain since September 2017.

He joined XPO in 2015 through XPO’s acquisition of Norbert Dentressangle, where he was Managing Director of the logistics division in the United Kingdom and Ireland.

Available Information

We are required to file annual, quarterly and current reports, proxy statements and other information with the U.S.

Securities and Exchange Commission (SEC).

The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, on our corporate website at www.gxo.com.

We are required to file annual, quarterly and current reports, proxy statements and other information with the SEC.

Reports filed with the SEC can be viewed at http://www.sec.gov and on our corporate website at www.gxo.com.

Materials are available online as soon as reasonably practicable after we electronically submit them to the SEC.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business