XPO May Tonnage Up 0.5%, Carrier on Track to Beat Q2 Forecast
Daily shipments rose 3.3% year-over-year in May as XPO's push into small-business freight lifts volume ahead of guidance.
XPO's tonnage per day climbed 0.5% year-over-year in May, putting the LTL carrier on course to beat its second-quarter tonnage forecast of flat growth. Daily shipments rose 3.3% while weight per shipment fell 2.7%, reflecting the carrier's strategy to chase local shippers and small businesses that ship lighter freight at better margins.
Why is XPO's tonnage outperforming guidance?
The carrier is outrunning typical seasonal demand trends and faces an easier prior-year comparison in June. May tonnage was down 5.7% in 2025, and June 2025 fell 8.9%, softer comps than the 5.5% April 2025 decline. XPO's second-quarter guidance called for tonnage to hold flat year-over-year. April final results showed tonnage down 1.5% y/y, so the May gain puts the carrier ahead of plan.
On a two-year stacked basis, May tonnage was down 5.2%, an improvement from April's 7% two-year decline. The sequential improvement suggests demand is stabilizing after a weak 2025.
Manufacturing data points to stronger LTL demand ahead
Industrial activity expanded for a fifth straight month in May. The Institute for Supply Management's Manufacturing PMI registered 54, up 130 basis points from April and the highest reading in four years. A reading above 50 signals expansion. The new-orders subindex hit 56.8, up 270 basis points month-over-month, an indicator of future activity. ISM inflections typically lead LTL volumes by a few months, so the May strength suggests continued tonnage growth into summer.
What XPO is charging on contract renewals
XPO does not publish revenue metrics in its mid-quarter updates, but management said on the first-quarter earnings call in late April that contractual rate renewals were up by a mid- to high-single-digit percentage during Q1. The carrier forecast second-quarter yield to come in "comfortably ahead" of the mid-single-digit year-over-year yield increase captured in the first quarter.
The carrier said it is winning share at "above-market" rates, driven by greater penetration among small and mid-sized businesses and increased use of premium services that carry accessorial charges. XPO's Q1 LTL revenue rose 5% y/y to $1.23B on slight tonnage growth and a 4% yield gain excluding fuel.
Margin outlook for Q2
XPO normally records 250 to 300 basis points of sequential margin improvement in the second quarter. Management expects to exceed the high end of that range, implying an adjusted operating ratio below 80.9%. The guide implies at least 200 basis points of year-over-year margin improvement.
What the tonnage gain means for small fleets
XPO's volume growth, particularly the 3.3% jump in daily shipments, signals that LTL carriers are pulling freight that might otherwise move on truckload lanes. Small fleets competing for local and regional freight face tighter capacity as LTL networks absorb lighter, higher-margin shipments. The shift to premium services and accessorials also suggests shippers are willing to pay for speed and reliability, raising the bar for independent carriers on service quality.
The ISM new-orders reading of 56.8 is the strongest forward indicator in the May data. If manufacturing demand holds through summer, LTL tonnage growth should continue, keeping upward pressure on contract rates and limiting spot-market opportunities for small fleets in lanes where LTL competes directly with truckload.
