gxo logistics case study

How DriveSafe Transformed GXO’s Delivery Efficiency

GXO deliver supply chain management solutions to some of the world’s most complex and high growth industries. The company tackles every logistics need, from warehousing to distribution, using a broad range of capabilities including e-commerce expertise, reverse logistics and manufacturing support.

The Project:

Working with a GXO contract for one of the largest UK food manufacturers, Data Driven developed a solution to monitor deliveries and collections throughout the order process. This solution coupled with the integrated DriveSafe system calculates safe and optimal delivery routes for the drivers. To create the robust Electronic Proof of Delivery (ePOD) system, we had to incorporate all manifest details with the ability to:

• Monitor and record discrepancies at both delivery and collection points.
• Allow drivers to take photographic evidence of any product damage and delivery documentation.
• Use Drivesafe to capture the vehicle/trailer height, weight, length and width, coupled with additional validation from the internal trailer solution

DriveSafe, a Data Driven Logistics product, safely navigates the best route possible, economically and avoids low bridges and weight restricted roads.

Data Driven worked side-by-side with GXO to refine the app, making it an exact fit for the needs of the business. The app makes it easier for drivers and transport staff to identify any anomalies, as the system provides dynamic access to live route information as well as the extraction of historic data.

The Results:

The new app allows drivers to:

• Easily see what loads they are carrying.
• Confirm loads are safe and secure.
• Enter and confirm the correct vehicle dimensions.
• Complete vehicle and trailer checks electronically.
• Record vehicle and trailer defects.

The transport team can delve into the details based on the planned route vs the actual route, with alerts to senior management if any drivers divert from the original route and risk heading towards a low bridge. The new portal gives office staff real time visibility of their deliveries to customers, with access to ETAs, late running and time on site.

“Data Driven Logistics went above and beyond to swiftly establish a logical and comprehensive system for our business. Leveraging their expertise, they promptly addressed and fulfilled all our requested changes, ensuring a seamless and hassle- free experience. “As a result, we now have a streamlined and user-friendly system that has successfully prevented any low bridge incidents.”

Andrew Zouch - General Manager

Experience the power of Data Driven solutions

Operational Turnaround - Warehousing

Libra Europe enhanced GXO Logistics' stock accuracy at an Amazon site, introducing efficient processes and training, achieving a notable 0.01% accuracy error, and securing a contract renewal with Amazon.

GXO Logistics - Amazon

October 12, 2023

Transportation

Libra Europe streamlined stock processes for GXO Logistics at an Amazon site, achieving a 0.01% accuracy error rate and securing a contract renewal.

Operating in 30 countries and with over 100,000 employees, GXO logistics is an American transportation and contract logistics company that manages supply chains for 50,000 customers worldwide. GXO operates approximately 800 warehouses with 2M sqft of space, making it the second largest third-party contract logistics provider globally.

Working at a flagship Amazon site of over 1M sqft, there was a requirement to improve stock accuracy by better managing the receipt, put-away and control of stock.

Working with GXO management, an analysis of the site was conducted, focused primarily on goods receipting, put-away and fast-tracking processes on the site. A results planning process was developed, building upon tools and actions already in place with over 150 discrete actions identified for delivery. Headline areas of focus developed within the analysis / results planning process were: Vendor management and conformance; Good receipting work flows and process; Optimum stock locations; Put away work flows and process; Addressing slow moving and dormant units; System issues and user training; Junior management development and performance-related skills sets.

Key output from the analysis was to redefine a ‘Golden-Zone’ through the warehouse with an emphasis being created on fast-moving SKUs - typically orientated within the facility for five days or less. Management control and reporting systems were reviewed and realigned to reflect business needs including frequency of review and generating action-orientated outputs.

Libra Europe spearheaded a series of transformative results. They pioneered a redesign of processes, ensuring the implementation of accurate put-away procedures. Both management development and operator training were effectively delivered. Impressively, a net stock accuracy error was reduced to a mere 0.01%, achieving a sigma level of 5. Furthermore, a 5S programme was rolled out at the site, which then served as a flagship for GXO Logistics. This exemplary performance culminated in a contract renewal with Amazon.

Meet Chuck › Learn More

• System directed picking
• Mobile Fulfillment app
• Configurations
• Case replenishment
• Returns putaway
• Operator command center
• Universal terminal
• Mobile sort
• Retail and e-commerce
• B2B distribution
• The fulfillment blog
• Case studies
• White papers
• All resources
• Customer success

GXO Empowers Retail & eCommerce Fulfillment

Leading 3PL integrates autonomous robots into retail operations in Europe and North America

At a Glance:

Customer Since: 2018

Sites supported: Multiple across the United States & Europe

Benefits: Throughput gains, increased accuracy, recruiting & retention

• 2x improved productivity
• 40% improved accuracy
• 80% reduction in training time

Transportation and logistics provider GXO depends on flexible automation from 6 River Systems to meet retail and ecommerce demand, telling DC Velocity, "the technology uses machine learning to double productivity rates and to improve accuracy by as much as 40% over manual methods."

“With the 6 River Systems solution we’re seeing an 80% reduction in the actual time it takes to train someone. We can have temp people come in and really quickly get up to speed. We’re also seeing a lift in retention of labor. With the removal of long walks and a lot of the physical work, the job is easier.”

Steve Lewis , VP of Solutions & Strategy , GXO

[On Demand Webinar] Automation Partners Strengthen Logistics Operations Together

"Our successful collaboration with 6 River Systems in the US has led to a seamless roll-out of the robots at our UK sites. Based on our pilots with retail apparel, the system handles peaks in consumer demand with near-perfect accuracy by complementing the work performed by our employees. The enhanced employee engagement, efficiency gains and improved consumer order accuracy support the increasing demand in retail and e-commerce fulfillment."

Gavin Williams, Managing Director, UK and Ireland, GXO

KEY QUOTES:

"We see about a 40% reduction in error rate. Reducing quality has a huge impact on customer service, and a huge impact on efficiencies. So that’s had a tremendous impact on our overall efficiencies."

"It takes about 15 minutes to train someone on this and the associates feedback has been really fantastic. They feel like they’re a part of robotics and this is the cutting edge of warehouse technology."

SCALABILITY

"We can buy chucks in the peak season of retail and then as the peak ends, relocate them to other growth sites. Very mobile. You can move them between sites, which is a huge benefit for us on the 3PL side."

PRODUCTS & INDUSTRIES WE SUPPORT FOR GXO

SPARE PARTS

MANUFACTURING

Want Chuck on your team? Talk with a specialist.

Make outsourcing your competitive advantage

Related content

Gxo earns boeing’s ‘supplier of the year for support & services’ award, gxo direct helps bbqguys expand efficiently, meet peak summer demand, gxo to lead bt’s supply chain outsourcing, 3d automated packaging improves efficiency, sustainability, and consumer experience, case study: major supply chain evolution for a sportswear company, case study: delivering a competitive advantage during exponential growth, case study: advanced analytics to help navigate unprecedented shifts in demand, case study: streamlined reverse logistics for a leading appliance manufacturer, we want to help you achieve your goals.

• Logistics Magazine
• Feature Articles

Generation Logistics Case Study: Katie Langford, Regional HR Manager, GXO

🕒 Article read time: 2 minutes

Before her graduate scheme at GXO, the word ‘logistics’ could have meant anything to Katie. “In all honesty, I didn’t know what the word meant!” she admits. “However, I did know there must be a process for my ASOS parcels to reach my door!”

That all changed though during her 10-week internship in the Future Talent Team during university, which led to a graduate placement scheme, with four placements across three different companies. 

“I had never considered logistics before applying for my internship,” she muses, “but I thought I would give it a go – and I absolutely loved it. If you thrive in a fast-paced and diverse environment, then you’ll enjoy a career in logistics.” 

For Katie, that dynamic, varied environment means providing HR support for over 500 people across six recycling centres in the south east region, as well as being the Contract Lead for a grocery customer. 

“My fourth and final placement was the same role I am doing now. After eight months, I was offered the role on a permanent basis and accepted. It is very different to being in a site-based role. I really like the variety and change of scenery – it definitely keeps you on your toes.” 

Her next move might be more lateral - perhaps to Learning & Development if the right opportunity arose - but there’s no chance Katie will be looking elsewhere. 

“I love the culture of GXO,” she smiles, “and would like to pursue internal progression for as long as possible.” 

Learn more about Generation Logistics .    

Published On: 17/08/2023 13:00:00

Comments section.

If you are a Logistics UK member login to add comments.

Latest articles

Revealed: the roads being resurfaced in your area financed by £8.3 billion reallocated hs2 funding.

Last week (10 April 2024), the Department for Transport revealed 102 of the 119 local authorities that received funding have responded to the department’s survey request to set out their plans. This means that local people and logistics operators can now check their local council’s websites and scrutinise their plans for themselves.

Read time: 2 minutes

Renewing your vocational entitlement.

Statistically around 60,000 vocational drivers must renew their licence each year. A number of these get rejected for many reasons such as drivers failing to sign their application or eyesight data not entered.

Ask The Mac

With Becky Martin, Senior Transport Advisor

Re-opening Manston airport could help UK trade take off again, says Logistics UK

E-news archive.

You can also view our e-news archive here.

Interested in Membership?

Get in contact using the Membership Enquiry Form.

Logistics Magazine Portal

The hub for finding relevant and informative features, news & compliance guides from Logistics Magazine

Sponsorship Opportunities

Learn more about advertising on the new digital  Logistics Magazine , with a variety of advert options to reach 30,000 relevant readers.

Magazine Contents

Logistics Magazine will cover all the latest news on stories breaking in the industry, including developments on COVID-19,  Brexit, Clean Air Zones, transport law and decarbonisation.

Our frequent features will tackle the broader issues affecting logistics such as the COVID-19 vaccination programme, technology and innovation, the political and economic landscape, global trade and the drive to reduce emissions across all transport modes.

Each month we explore a different topic in depth in our popular Compliance section, while each week we will publish answers put to our Member Advice Centre team.

View Supplements and Previous Printed Editions

View Supplements and previous printed editions of Logistics Magazine here.

Logistics UK

@LogisticsUKNews

• Careers at Logistics UK
• Traffic and weather alerts
• Knowledgebase
• Yearbook of Road Transport Law Portal
• Environment
• Logistics UK Policy Councils
• Policies & Certificates

Newsletter Signup

© Copyright 2008-2024 Logistics UK (a trading name of FTA)

Logistics UK is a trading name of Freight Transport Association Limited

Registered Office - Hermes House, St John’s Road Tunbridge Wells Kent TN4 9UZ

Registered in England Number 391957

You're attempting to view content that requires a login.

You can use the "Forgotten Password" link below (to set up a login) if you're logging in for the first time, or if you already a login and have just forgotten your password.

As long as your company is a member, and we have a record of your email address, then you should be able to reset/update your password, or create a login for yourself, using that "Forgotten Password" link.

Not a member?

You'll find membership benefits you in the following ways.

• Saves you time
• Saves you money
• Increases your operations efficiency
• Gives you peace of mind
• Keeps you informed of the latest industry developments

Ask a question from expert

Organisational Theory and Practice: A Case Study of GXO Logistics

Added on   2023-06-10

About This Document

   Added on  2023-06-10

End of preview

Want to access all the pages? Upload your documents or become a member.

Organisational Structures and International Expansion - A Case Study of Deloitte lg ...

Organisational behaviour: characteristics of organizational structure, impact of culture and leadership behavior lg ..., analysis of the different organisational structures lg ..., introduction to management: functions, marketing, talent management, organizational culture lg ..., characteristics of three types of organisational structure lg ..., organisational structures and culture in fire brigades union lg ....

Rodriguez v. GXO Logistics Supply Chain, Inc. et al

• Parties (4)

Continue to Create Account

GXO Case Study: A Data-Driven Security Robotics Program

Home » GXO Case Study: A Data-Driven Security Robotics Program

June 3, 2022 Updated Stats

This security robotics case study was developed by the Security Executive Council and represents a snapshot from February 23, 2022. The PDF version of that snapshot can be found here . In the PDF version, GXO’s name was marked as “Global Supply Chain Management Company” while final internal approval processes to release the company name were completed. Please note the only differences in this online version and the PDF version is the inclusion of GXO’s name and minor formatting to increase the readability and overall user experience.

Important Update: Since this case study data was released on February 23, 2022, GXO’s aerial-based DroneSentry systems have conducted more than 2,672 automated missions and the ground-based DroneDog system at GXO’s distribution center in Clayton, IN has patrolled more than 400 miles as of June 3, 2022.

Quick Quote from the Asylon CTO

“We’re focused on building true security technology solutions. This means having responsive customer feedback loops that flow directly into how we design and build. The recent DroneDog release is a great example of working so closely with our customers and has resulted in the first true air and ground robotic security solution.”

-Adam Mohamed, Co-Founder & CTO

Security Executive Council Introduction

The Security Executive Council (SEC) Solution Innovation Partner (SIP) program evolved to help security practitioners expedite choosing a trustworthy risk mitigation vendor with confidence given the myriad of possible options in the marketplace. Proven Solution Innovation Practice Case Studies help to evaluate performance claims and differentiate security solution providers for business outcomes including risk mitigation, return on investment, and security assurance.

This robotic perimeter security case study offers a proven demonstration of how GXO is using Asylon’s intelligent air and ground robotic solutions to mitigate risks, enhance safety, security, and asset protection; while improving agility, cost, and operational efficiency. The case study also examines how Asylon’s 24/7 Robotic Security Operations Center (RSOC) is being leveraged for real-time risk/threat/vulnerability intelligence gathering and around-the-clock support. The primary intangible benefit the Global Supply Chain Management Company has seen is increased corporate brand equity.

This was validated by the Security Executive Council and GXO .

Risk Issues and Mitigation Opportunities:

GXO is responsible for billions of dollars in assets and revenues. Ensuring that customers can resiliently distribute their products in an effective, efficient, and timely manner enables world-class service level agreements. The GXO security team was looking for an innovative solution for their perimeter security operations that addressed oversight of key risk mitigation opportunities including:

• Enhanced visual security risk , threat, and vulnerability coverage in and around large distribution centers and warehouses with many potential access points.
• Optimized autonomous support of security officers to mitigate a country-wide labor shortage.
• Improved reliability for observing and reporting alarms, anomalies, and mitigation responses.
• Improved brand value protection through more effective security response, asset protection, and risk management procedures.
• Created a safer environment for employees and contractors by using robotic solutions rather than personnel to investigate security alarms.
• Delivered value to shareholders by optimizing corporate security costs and prioritizing solutions that are scalable while providing an ROI.
• Built a layered security solution to effectively protect people, assets, and stakeholder interests.
• Created a flexible and repeatable process for detecting, investigating, reporting, and responding to alarms while lowering the liability risk of people (contractors, employees, first responders, visitors) in the process.

Solution Requirements:

• Automated drone system to include a battery swap capability for back-to-back security missions with less than 5 minutes of downtime. Note: All other drone-in-a-box systems have a ~40-minute downtime to fully charge by using an inductive charging system rather than battery swap.
• 24/7/365 customer support .
• Remote monitoring capability with real-time video feeds and tele-operable drones/robotics at near-real-time speeds (less than .5 second latency).
• A dedicated Robotic Security Operations Center (RSOC) for remote monitoring and operations.
• Automated remote software updates .
• Consistently scheduled maintenance plan to enable system reliability throughout the length of the multi-year contracts.
• OPEX costing structure .
• A clear regulatory path to receive Beyond Visual Line-of-Sight (BVLOS) waivers from the Federal Aviation Administration.

Security Robotics Solution Delivered:

• Asylon’s drone solution has been implemented across multiple GXO facilities. Asylon’s ground asset is exiting beta-testing and is set to scale across multiple GXO facilities.
• Full-service robotic perimeter detection, deterrence, and risk mitigation security solution to include hardware, software, remote operation, and monitoring, maintenance plans, on-site licensed drone pilots to comply with FAA regulations, and software/hardware upgrades.
• Open platform software system with multiple smart sensor integrations for remote monitoring and alerting. Clear protocols were developed for pre-programmed responses to the alarms using the drone.
• Autonomous precision landing
• Automated battery swap for rapid power regeneration (under 5 minutes for a complete cycle)
• Environmental protection
• Boston Dynamics Spot platform
• Asylon custom “PupPack” for connectivity, remote operation, and security payloads
• Asylon custom “DogHouse” for environmental protection and recharging.
• Flight recording and video management system for post-incident investigations.
• FAA airspace requirements consulting and expertise to navigate complex requirements and chart a clearly defined path toward fully autonomous site operations.
• ~20% increased flight time
• Increased weatherization (light rain & snow)
• 20x optical zoom
• 720 EO / 640 IR

Quote from Tommy Nelson

Sr. director of security, gxo.

“Our company is innovating across the board. The security program is no different and has already seen significant changes. With all that’s going on in the world right now, if you’re not participating in the development of these programs and systems, then you are at a disadvantage. However, through our partnership with Asylon, we’re able to prioritize reliability, scalability, and upgradeability in the security technology space which allows us to better plan for the future.

Automated drones and robotics are an absolute game changer and allow us to address many of our requirements for detecting, deterring, and safely responding to potential criminal activity. These systems have already shown measured success at decreasing unwanted criminal activity and increasing safety. As we continue our partnership with Asylon, we are confident in the continued success. Asylon has been a tremendous partner as we innovate and continue to develop these innovative programs!” -Tommy Nelson, Director of Security, GXO

Outcome and Benefits of Service Including ROI (As of Feb. 23, 2022):

• End-user confidence in Security’s physical security program confidence rose from 3 to 8 out of 10 .
• More than 9,500 automated security drone missions across sites. The drone asset at a 200ft altitude can see approximately 10X the area that a guard can at 6ft altitude (eye level). The drone also patrols 5X faster on average than a security officer, thus covering more area at a faster rate.
• More than 154 miles patrolled with the ground asset at one site in the first 79 days of the beta testing period.
• A noticeable reduction in vehicle break-ins at deployed site parking lots.
• A one-of-five-awarded-in-the-world BVLOS waiver that enables Operations Over People (OOP), Operations Over Moving Vehicles (OOMV), and Nighttime Operations while designating the Robotic Security Operations Center (RSOC) Analyst as the Remote Pilot In Command (RPIC).
• The total success rate for autonomous landing on the DroneHome system across all sites and in all wind conditions is 94.8%.
• 2020 (starting date = first deployment date) = ~2.98 missions per day
• 2021: ~19.7 missions per day
• 2022: ~21.7 missions per day
• [Editor’s June 3 Update]: ~32.1 missions per day since Feb. 23, 2022

Quantitative An alysis (As of Feb. 23, 2022): “GXO Site #1”

• Experienced a 385% YoY mission count increase .
• Responded to and cleared 819 security alarms on the property with the drone.
• According to Crime Data collected through a public law enforcement database the crime index prior to Asylon deployment to deploying at Site #1 was 19.0. The crime index to date has been reduced to 16.6 indicating a 13% reduction in crime from August 2020 to August 2021.
• The total flight hours are 1,130.5 .
• A success rate for autonomous landing on the DroneHome system greater than 90% .

A Note from the Security Executive Council

This process was overseen by a Council Faculty member with 25+ years of experience in developing and leading people and asset protection programs as a trusted security advisor for global, multinational organizations. Client end-user authenticated February 2022.

Note: The Security Executive Council’s Solution Innovation case study represent a snapshot in time to demonstrate a solution to a specific-organization’s issue. End-user diligence, trial and measurement are strongly recommended for any contemplated risk mitigation activity.

Interested in Learning More?

Asylon, Inc.  is the leading robotic perimeter security company in the United States.

We partner with commercial and government entities to modernize traditionally inefficient security practices. By providing customers with the most advanced, American-made, robotic security technology available, Asylon helps to ensure that both government and private-sector companies can protect their people, assets, and profits against threats.

Our mission is to provide a customer experience that is second-to-none. If you have questions, don’t hesitate to get in touch with our experts.

Previous Post GXO enhances security and safety with high-tech DroneDog and Aerial Drone System from Asylon

Next post autonomous perimeter security systems for base defense, leave a reply cancel reply.

Save my name, email, and website in this browser for the next time I comment.

Privacy Policy

Copyright © 2022 Asylon. All rights reserved.

• Robotic Perimeter Security
• Security Drones
• 24/7/365 RSOC Services
• Logistics & Transportation
• Manufacturing & Industrial
• Energy & Utility
• Campus Environments
• Case Studies
• Request a Demo

Rating Action Commentary

Fitch Affirms GXO's LT IDR at 'BBB'; Outlook Revised to Negative

Mon 15 Apr, 2024 - 3:31 PM ET

Fitch Ratings - New York - 15 Apr 2024: Fitch Ratings has affirmed GXO Logistics, Inc's (GXO) Long-Term Issuer Default Rating (IDR) at 'BBB' and revised the Rating Outlook to Negative from Stable. Fitch has also affirmed GXO's senior unsecured debt at 'BBB'

The Negative Outlook reflects the GXO's seeming post-Clipper strategic and capital allocation shift away from gross debt reduction over the near term towards another sizeable and largely debt-funded acquisition. Fitch currently forecasts EBITDA leverage will rise to the mid-to-high 2.0x on a pro forma basis, requiring significant management commitment to deleveraging in order to improve EBITDA leverage to Fitch's 2.0x negative rating threshold. However, the consistency and scale of GXO's FCF profile would provide the capacity to deleverage on a gross debt basis, should the company prioritize it.

A downgrade could be triggered if Fitch expects capital allocation priorities will deviate from gross leverage reduction in the near term or that a regular cadence of large debt-funded transactions will maintain elevated leverage over the long term. Fitch will look to resolve the outlook in the next 18 months-24 months.

Key Rating Drivers

Leverage and Capital Deployment are Key: Management's dedication to deleveraging and managing run-rate EBITDA and EBITDAR leverage below 2.0x and 3.3x, respectively, will be key to maintaining GXO's 'BBB' ratings. It is Fitch's current view that the size and timing of the Clipper acquisition (completed in late-2022) and the Wincanton acquisitions are most likely coincidental and that the availability of other similarly sized transactions moderates the likelihood that this scale and pace of transactions will continue through the medium term.

Fitch currently expects GXO will prioritize deleveraging within the next 18 months-24 months following a potential transaction close, similar to its actions following the acquisition of Clipper in 2022. This approach supported EBITDA leverage and EBITDAR leverage of 2.1x and 3.1x, respectively, at YE 2023.

FCF Supportive of Deleveraging: Fitch forecasts 2024 FCF of around $175 million to $190 million in 2024 before trending toward the mid-$300 million level in 2026 with contributions from Wincanton, synergies, lapse of transaction-associated costs, and continued fundamental growth. While solid execution will be needed, the FCF forecast would be sufficient to support deleveraging by the late 2025 to early 2026 timeframe.

Wincanton Supports New Verticals: The addition of Wincanton would modestly strengthen GXO's business profile, adding a footprint in new verticals within the U.K. market. The similarity in operations and contract structures, which are largely on a cost-plus basis, are supportive of fairly low integration risks. The new platform is also supportive of GXO leveraging Wincanton's reputation to further expand in these target markets.

2023 Downcycle Demonstrates Stability: Fitch expects GXO to continue to demonstrate a strong secular growth profile, benefitting from trends in outsourcing warehouse and supply chain services. The company's reputation for service, operating efficiency supporting customer cost savings, and global scale are supportive of its growth prospects. Fitch projects organic revenue growth in the mid-single digits in 2024 and that growth will remain in the mid-to-high single digits over the medium term.

Fitch believes GXO's operating performance in 2023 demonstrates its cyclical durability, considering the wide-spread inventory de-stocking trends that negatively affected much of the logistics and transportation markets in 2023. Operating performance in 2023 reflected continual new business wins, moderately lower volumes at customers' sites, and the highly contractual nature of customer relationships. This supported steady EBITDA margins at about 7.5%, which was nearly flat from 2022 levels.

Rating Considerations: GXO's ratings reflect its highly contracted and growing FCF profile due to solid relationships with customers, strong secular growth tailwinds driving high-single digit revenue growth over the medium term, and a strong market position supported by large scale and technology integration. Fitch expects capital allocation priorities to be focused on post-acquisition debt reduction in the near term and growth and bolt-on M&A longer term.

Derivation Summary

GXO is one of the leading providers of contract logistics globally though smaller than Deutsche Post AG's (BBB+/Positive) DHL Group. Relative to Deutsche Post AG, which has significant operations outside of contract logistics, GXO is considerably smaller, generates lower margins and is less diversified operationally.

Similar to Deutsche Post AG, FedEx is considerably larger and more diversified operationally than GXO, and has a considerably smaller logistics business. Fitch projects Deutsche Post's EBITDAR leverage to be in the low-to-mid 2.0x in the medium term, compared with GXO's in the low-3.0x.

Key Assumptions

--Organic growth in the mid-single digits in 2024 before accelerating to around 7% over the medium term as customer inventory purchases recuperate from de-stocking activity in 2023 and GXO benefits from new business wins and secular tailwinds over the medium term;

--EBITDA margins remain fairly range-bound at 7%-8% through the forecast with slight improvement over the medium term from a rising mix of automation revenue, cost optimization initiatives and cost synergies;

--Capital intensity remains stable in the 3%-4% range;

--FCF in 2024 and 2025 is fully directed at debt repayment, reflecting an adherence maintaining target leverage levels;

--SOFR remains around the 4%-5% range.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--EBITDA leverage sustained below 1.3x and/or CFO-capex/Debt sustained above 20%;

--GXO manages lease exposure and contract matching in a way that supports EBITDAR leverage below 2.3x;

--Further strengthening in FCF stability or improved scale, such as strong success in GXO's 2027 plan, while maintaining financial flexibility.

Factors that could, individual or collectively, lead to a stabilization of the Outlook:

--GXO demonstrates a strict commitment to gross debt deleveraging, reaching EBITDA leverage of under 2.0x;

--Successful integration of Wincanton and GXO balances M&A priorities with maintaining leverage.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--EBITDA leverage sustained above 2.0x and/or CFO-capex/Debt sustained in the low-double digits or below;

--GXO manages lease exposure and contract matching in a way that EBITDAR leverage is sustained above 3.3x;

--A shift in GXO's operating profile or contract structures that leads to heightened cash flow variability.

Liquidity and Debt Structure

Comfortable Liquidity: GXO had a solid liquidity position at Dec. 31, 2023, composed of $468 million of cash and an undrawn $800 million revolving credit facility, which has been extended to 2029. Liquidity is also expected to be supported by consistently positive FCF generation. GXO's next maturities is the $236 million term loan due 2026 and the $400 million senior unsecured note due 2026. It also has flexibility to paydown the $500 million term loan due 2027.

Fitch Lease Capitalization : Fitch's EBITDAR leverage metrics includes a minority portion of capitalized leases costs based on amounts tied to leases that are not tied to a specific customer contract and it is believed GXO has limited flexibility to exit leases. On the leases Fitch capitalizes, it applies an 8x multiple, reflecting the real estate leased assets.

Issuer Profile

GXO Logistics, Inc. is one of the largest global providers of contract logistics, encompassing goods management, order fulfilment, reverse logistics and supply chain design. It operates over 200 million square feet of warehouse space in Europe in North America.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores .

• senior unsecured

VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

PARTICIPATION STATUS

The rated entity (and/or its agents) or, in the case of structured finance, one or more of the transaction parties participated in the rating process except that the following issuer(s), if any, did not participate in the rating process, or provide additional information, beyond the issuer’s available public disclosure.

APPLICABLE CRITERIA

• Corporates Recovery Ratings and Instrument Ratings Criteria (pub. 13 Oct 2023) (including rating assumption sensitivity)
• Corporate Rating Criteria (pub. 03 Nov 2023) (including rating assumption sensitivity)
• Sector Navigators – Addendum to the Corporate Rating Criteria (pub. 03 Nov 2023)

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• Corporate Monitoring & Forecasting Model (COMFORT Model), v8.1.0 ( 1 )

ADDITIONAL DISCLOSURES

• Dodd-Frank Rating Information Disclosure Form
• Solicitation Status
• Endorsement Policy

ENDORSEMENT STATUS

Supply Chain Management

Creating resilient supply chains. Sustainable, flexible and autonomous.

Computer Vision Spearheading AI Productivity In 2024, Says Latest Research

Average productivity gains of 42% over three years predicted but potential barriers are a lack of skills and in-house knowledge.

Share this link via:

Or copy link:

Link has been copied

Munich, Germany. 18 th April 2024 –  Adoption of Computer Vision technology, powered by AI, is at a tipping point and set to power productivity across a range of industry sectors, according to the latest research commissioned by Panasonic Connect Europe. On average, decision-makers predict a productivity increase of 42% in the three years following deployment. The manufacturing industry anticipates the biggest boost with increases in productivity as high as 52%. 

Computer Vision is the field of artificial intelligence that enables computers and systems to derive meaningful information from digital images. It is the “eyes of AI”, observing, identifying, classifying, tracking, and ultimately interpreting images into usable “knowledge” that can be further interrogated by humans or by complementary AI. 

Wide variety of applications

Respondents report that Computer Vision technology is being used across a wide variety of business departments and applications . Practical activities such as repairs and maintenance, production line monitoring, and quality control slightly outweigh use in security and health and safety. Applications in logistics and supply chain are popular, along with real-time projection mapping and people tracking, demonstrating the broad scope of use cases relevant to Computer Vision tech.

Available skills a barrier to deployment

The biggest barriers to deploying the technology were a lack of external specialist support (37%) and maintaining computer vision knowledge in the business (33%). Businesses are also highly sensitive to the potential ethical concerns of deploying AI-powered Computer Vision applications. The largest concern being data security (35%), closely followed by personal privacy and surveillance concerns, lack of corporate guidance and fears for job replacement – all level at 32%. 

Wider AI deployment surging ahead

Looking at the wider adoption of Generative AI, the momentum is clear. Overall, more than two-thirds (67%) say that using generative AI is important to their business. More than one-third of respondents (37%) have already implemented a solution and are seeing benefits. A further third (34%) are in the planning stage or the process of implementing the technology. 17% are still thinking about it, but only 13% say they will not deploy Generative AI at all.

"The research shows clearly that Computer Vision technology is not just a concept but a present reality that is already steering businesses towards significant productivity and operational gains. Organisations across all sectors that are not yet in the planning stages of deployment are in danger of falling behind. There is also a clear need for specialists, such as Panasonic, to assist businesses in understanding how to deploy this technology effectively and responsibly."

The independent research, carried out by Opinion Matters and commissioned by Panasonic Connect Europe, surveyed 300 senior decision makers responsible for digital transformation and AI/computer vision implementation, working in companies with an annual turnover of 50 million+ Euros across Germany and the UK.

Select your language

• Asia-Pacific