Uday Khanapurkar

Uday Khanapurkar asked if peak season surcharges are still included in the base case guidance and whether the Q1 bid season pull-forward indicated a deteriorating pricing environment in Q2. He also questioned the timeline for Dedicated rates to recover.

Answer

CFO Kevin Beth clarified that surcharges are not in the base case but are contemplated in the high-end scenario, with timing being uncertain. Executive Phillip Yeager explained the Q1 bid advantage was due to aggressive truckload pricing pushing conversions to Intermodal, not a change in Intermodal pricing itself. Regarding Dedicated, he noted it involves multi-year contracts in a competitive environment, but the company is managing well with strong renewals and cost controls.

Uday Khanapurkar from TD Cowen sought clarification on whether customer volume outlooks were a primary driver for the recent contract realignments. He also asked if GXO is already seeing business shifts related to potential changes in the de minimis rule.

Answer

CFO Baris Oran confirmed the realignments were driven by customers' consumer volume forecasts post-peak season. He reiterated that GXO's overall underlying volumes are expected to be flattish in 2025. CEO Malcolm Wilson stated that while GXO doesn't currently serve customers using the de minimis exception, the company is already receiving new inquiries from businesses looking to establish a local U.S. warehousing presence in anticipation of the rule change, which is seen as a net positive.