Dennis McCaffrey, SVP at RXO, shares incredible insights into XPO’s (and now RXO’s) strategic evolution, including Brad Jacobs’ surprising pivot from an asset-light brokerage rollup to a major asset-heavy operation with the acquisition of Con-way. Learn what drove this monumental shift and how it reshaped the logistics landscape. McCaffrey also details RXO’s current strengths, from its third-largest freight brokerage position to its managed expedite and last-mile offerings, highlighting their competitive advantage in solving complex supply chain challenges.
When Brad Jacobs arrived at what was then a roughly $175 million company in 2011 and told the team he wanted to build a $4 to $5 billion enterprise, the original roadmap was explicit: roll up asset-light freight brokers. That plan quietly died when XPO acquired Con-way, a move that Dennis McCaffrey, now SVP of Enterprise Sales at RXO, describes as an unforeseen but ultimately rewarding pivot toward heavy assets — one that reshaped the entire company.
“When I first met Brad, his vision absolutely was an asset-light model,” McCaffrey said in a video interview. The early acquisitions reflected that: 3PD for last mile, Pacer for intermodal drayage using owner-operator contractors, and New Breed for warehousing. It was the Norbert Dentressangle acquisition in Europe, however, that shifted Jacobs’s thinking. Seeing the seat at the table that Norbert’s asset-based trucking division commanded with global customers, McCaffrey said, opened the door to pursuing a full LTL network.
“The biggest driver of EBITDA — and Mario now has taken that to all new heights and done an incredible job with XPO — was that network. We could maximize utilization, drive the yield and volume through that network and really drive a lot of cash flow and a lot of EBITDA.”
McCaffrey said the case against rolling up truckload brokers was partly structural: overlapping customer bases diluted synergy value. He noted that RXO’s later acquisition of Coyote was an exception — the two brokerages shared only roughly 30% customer overlap and roughly 30% carrier-base overlap, making it a cleaner combination than most brokerage mergers. XPO’s sale of CFI’s full truckload operation, he added, was telling: the only hard asset Jacobs ultimately shed was full truckload, a signal about the mode’s operating-ratio economics compared with LTL and managed transportation.
Today RXO positions itself as the third-largest freight broker and one of the largest managed transportation providers, with more than $4 billion in freight under management. Its last mile division executes more than 30,000 deliveries to homes daily across more than 70 hubs in North America, though McCaffrey acknowledged that year-over-year softness in appliance sales has weighed on demand in that unit. The company is now working to connect its last mile hub network with its LTL TMS to offer big-and-bulky transactional LTL, a product McCaffrey said is drawing strong retailer interest.
McCaffrey, a Marine Corps veteran who joined the freight industry through a small brokerage and trucking operation before it was eventually acquired into the Express One lineage, said the company still owns the NLM managed expedite platform — originally an automotive industry venture that passed through Landstar before landing at XPO. He described RXO as likely the largest single-transaction expedite provider in the market today and said the company is now exploring ways to use that technology to serve the spot market.
Looking ahead 12 to 18 months, McCaffrey was measured. He said regulatory pressure will continue to push capacity exits, and that any volume spike in that tightening environment will create significant strain. “If the capacity is going to continue to get tighter and we get any volume spike whatsoever, then it’s going to be a very big challenge,” he said. His broader advice to shippers: engage now on dedicated contract carriage, which he said is already gaining traction as customers seek to lock down capacity.
XPO’s pivot from asset-light brokerage roll-up to LTL assets was driven by the Norbert Dentressangle acquisition in Europe, not the original plan, per RXO SVP Dennis McCaffrey.RXO manages over $4 billion in freight, ranks as the third-largest freight broker, and delivers more than 30,000 big-and-bulky last mile shipments daily from 70-plus North American hubs.McCaffrey flagged continued capacity tightening over the next 12 to 18 months, with dedicated contract carriage gaining customer interest as a hedge against potential volume spikes.
Speaker 1 [0:00] Well, our first guest, Dennis McCaffrey. I’ve known Dennis since the first days of the, what is now RXO. Dennis was a part of a company called Segments, which was a bulletin board traded stock that then became part of XPO, that Express One, then XPO. So we’re gonna talk a little bit about the history of this industry. Let’s bring Dennis in. Dennis, how are you, sir?
Speaker 2 [0:26] Hey Craig, great to see you.
Speaker 1 [0:27] You’re the SVP of Enterprise Sales at RXO. I’ve known you for decades, back to the old St. Joe, Michigan, or Niles offices up there at the old Express One. Would love to get the history of your career and how you ended up in this industry.
Speaker 2 [0:47] Well, Craig, when I got out of the Marine Corps, I was looking for a job. I was in college and ran into a a buddy of mine who was, uh, who was at the time, uh, starting a, a small brokerage operation, uh, and trucking operation. And little did I know when I, uh, took that job, uh, as I was going back to college, that, that my whole career would then end up being that. And through a series of events, that company was acquired, uh, and then through another series of events, that company wound up acquiring Express One, um, which ultimately got acquired by Brad Jacobs, and the rest is history. So, um, through, you know, I, I’ve— my whole background has been primarily in the sales role, in a commercial role. Um, faith, you know, I’ve been primarily, uh, customer-focused and growth. Uh, when we first met the Express One guys, I think they were around a $20 million company, and we grew that to about a $175 million company early days before we met Brad. And that’s, that’s when, uh, when I met you, Craig.
Speaker 1 [1:44] Yeah, I mean, it was early days. Mike Welch, uh, was there. Mike Welch I knew when we first started working with Express Express One up in Michigan. It was the National Logistics Management, the NLM business. We put somebody on site, a guy named Chris Harlembopoulos, which has the best name. The dude was bigger than life. By the way, Harlembopoulos has thinned out. He’s a fan of the show and good dude. But he was on site. And the idea was that we would use US Express’s Express Direct capacity to provide on-demand And really guarantee capacity but not guarantee a price. We were one of the first carriers to take advantage of that. Frankly, brokers at that point were more backhaul and really didn’t see the opportunities. Express One was one of the first companies to sort of realize that they could use the truckload assets to provide on-demand capacity. You were right there at the ground floor of that. What was it like seeing, you know, the Welch’s take this business By the way, rest in peace, Mike Welch. Take this business and build it into something, and then sell into or have a bigger-than-life Wall Street investor like Brad Jacobs step in and use that as a platform to— what was that like, really, in the early days?
Speaker 2 [3:06] Well, I think early days, the one thing we recognized, Craig, right away was that, hey, this business is scalable. However, the expedite market was fairly small, especially back then. I mean, there was a very limited number of carriers that had Qualcomm capabilities or real-time track and trace, which was very critical for line-down situations. Majority of the business, just as it is today, was related to the automotive sector. But the one thing we recognized, the reason we partnered with your company at the time was, you know, you couldn’t have a truck available within 90 minutes, uh, of reaction time throughout the entire nation. I mean, even if you had thousands and thousands of trucks, you just couldn’t supply that demand. And there became a bigger, bigger demand for truckload quantities versus the, the cargo van quantities. So partnering with, with, uh, with you guys and other companies allowed us to grow the scale of what was then Express One. Again, Mike and his brothers were just, you know, wonderful leaders. Uh, they, uh, they had essentially was a, a family-run business, but that was public. Um, and they had, uh, they had a great vision of growing, um, that business from the expedite side. But then when Brad came along, it was like, look, this is a very fragmented industry. Um, we can grow this well and beyond. We can use some of the capabilities that we learned in the expedite business as far as just-in-time. Um, you know, one of appropriate topic for today, uh, you know, extreme carrier vetting and making sure that we do, do things the, the right way and deliver to our customers, um, uh, from a, I know, in a time-critical nature. Taking some of those lessons learned and applying those in the brokerage space, I think, as we go today. And just a little-known fact, we still own the NLM platform. It’s our managed expedite platform. We still are probably the largest, um, single-transaction expedite provider today, and we’re looking at ways to leverage that technology now to serve the spot market, which is obviously a massive deal right now.
Speaker 1 [5:04] Yeah, NLM, I remember you guys at the point Express One did not own it. It was at one point an independent company, sort of a dot-com enterprise set up by the automotives, the Automotive Logistics Network, sold to Landstar, and then Landstar ended up selling it to XPO. And of course, it’s lived there. But it was interesting when I think back to those days, I was in my 20s. It was, you know, early 2000s.
Speaker 2 [5:32] You’re both a lot younger, Craig.
Speaker 1 [5:35] What’s that?
Speaker 2 [5:36] I said you’re both a lot younger then, Craig.
Speaker 1 [5:38] We had hair back then too. Yeah, we had hair.
Speaker 3 [5:41] Yeah.
Speaker 2 [5:41] Or different color hair.
Speaker 1 [5:43] Yeah. This business is brutal. But Dennis, I think the thing that was really— brokers were not playing in the on-demand last-minute business. They were mostly either backhaul, you know, doing loads that provide carriers American Backhaulers model of finding freight to load a carrier on a backhaul lane, or really were kind of helping do optimization. Managed trends was starting to become a thing. Companies like TransPlace, the Menlo Logistics, which is a part of RXO, was sort of taking on a role, but it was still a very cottage industry. It really wasn’t until the— really since the financial crisis in 2009, we saw this massive growth of broker’s plane primary routing guide. You were, you know, Express One was very early in that business of using sort of an in-house brokered model to provide relief. I mean, it was instrumental in the growth of what’s now RXO.
Speaker 2 [6:39] Yeah, 100%, Craig. I think the big thing that changed was technology, obviously. In the early days, from a technology perspective, you know, we had to utilize owner-operators, Qualcomm technology outfitted on all the trucks. Um, you know, there wasn’t the MacroPoint, there wasn’t, there wasn’t other, um, abilities to track cell phones. You know, it just wasn’t as accessible to the, to the wide range of carriers, especially smaller carriers. Um, but, you know, as, as things took on with, with the development from, uh, from an XPO, now RXO perspective, our RXO Connect platform, and then connecting with carriers so that we can provide that real-time track and trace. The other thing is we have our Flex Fleet, which is, you know, we have drop and hook capabilities throughout the United States and Mexico and Canada as well. Allows us to have more of an asset feel as a broker, which I think is something that, that has changed dramatically in the industry since I’ve been in it, is that, you know, brokers acting more like assets and being relied upon for just-in-time transportation like we’re talking about, and also high-value transportation, high-value product transportation.
Speaker 3 [7:44] Yeah, I agree wholeheartedly with that, that shippers really love it when you can provide that asset-like service with the flexibility that a broker can provide from a network and service standpoint. So as we talk about RXO’s business today, what would you really call the core of it? We’ve talked about all of the different things that you guys all do as far as managed transportation and brokerage and last minute, certainly CapacityNow. What would you call the core and what are you most proud of?
Speaker 2 [8:11] Well, we’re proud of everything we do, but I think, you know, we’re the 3rd largest freight broker. We’re very proud of that position that we have. And, um, you know, we’re also one of the largest managed transportation providers. Uh, you know, we manage a little over $400— uh, $4 billion in freight under management. Uh, our, our managed expedite platform actually falls underneath that, um, uh, that business unit as well. Um, we also offer dedicated transportation and dedicated contract carriage, which, um, from an asset perspective, which is actually gaining a lot of traction right now with this type of market. Customers want to lock down capacity and looking at dedicated contract carriage a lot more closely right now. Um, but our last mile division is the largest big and bulky last mile provider. Uh, you know, we do well over 30,000+ deliveries to homes each and every day, and that’s a wide-ranging business. And now we’re looking at connectivity between leveraging our last mile hub network with our LTL TMS to offer big and bulky transactional LTL services, which is pretty exciting. And a lot of retailers and customers are very interested in that product. So we really have a wide breadth of servicing and service offerings. And that’s kind of what I think what our competitive advantage in the marketplace is compared to some of our peers. We can really help customers, especially large customers, understand, solve complex problems, complex challenges that they’re having, and be more than just a truckload provider.
Speaker 3 [9:36] So Dennis, we’ve heard a lot. I feel like we’ve been talking a lot about last mile recently. What are you seeing as far as demand there?
Speaker 2 [9:43] Well, you know, it’s a little bit— demand is a little bit soft right now overall because I think if you look at like appliance sales are down, you know, from a year-over-year perspective, and that’s a big driver for us, a big bulky last mile network. However, last mile overall is still a very high demand, very high demand product. We have over 70+ last mile hubs across North America. And, you know, we’re working with just all the biggest, largest customers right now in that space. And I think, you know, we’re having ongoing conversations about how we can get more and more creative with those services, how we can get more and more efficient and leverage technology to maximize stops, maximize utilization, and reduce cost.
Speaker 1 [10:29] Dennis, I’d love you to sort of take us back through history. So Brad Jacobs comes in— by the way, I had stock in XPO Express One at $0.75. My broker, which I’ll never forget this, it got to $1.25, and he talks me into selling it. He also talked me out of— this was in 2009— of putting a put on Citibank right before the financial crisis, which I would have made a lot of money on. But neither here nor there, money that’s not done. But this guy, Brad Jacobs, comes in. He was an unknown commodity, had been successful in waste management in Rental, the rental business comes in. Did you have any— could you have envisioned what XPO would become and RXO would become today? I got to imagine back in 2000— and was that 2012-ish, I think, when Brad Jacobs first arrived? I actually had drinks with Mike Welch right after the Segments deal. And I’m like, dude, what are you doing? You’re selling into this public shell of a company, this bulletin board stock. You had a plan, but then Brad Jacobs comes in a couple of years later, obviously one of the most iconic founders and entrepreneurs that’s ever been in logistics, certainly would be in the Hall of Fame. What was it like in those early days?
Speaker 2 [11:48] Well, Craig, and I’m sorry about your transaction, ’cause I think you probably would be just flying your plane I would be doing something else.
Speaker 1 [11:56] So it was, it was, you know, God’s, God’s mission to make sure that I had to have a job and do some real work. So maybe that’s what this is. Every, every missed opportunity is a door open. But Dennis, what was it like?
Speaker 2 [12:10] Yeah, so I mean, look, Brad comes in, it was actually 2011, and, um, and Brad comes in and, uh, you know, he initially first told us, hey, we’re gonna be, uh, we’re looking to be like a $4 or $5 billion company. We thought that was, you know, crazy because we were only about $175 million at the time. And it was, it was kind of beyond all of our grasp. However, you look at the— we looked at, all looked at the history of Brad’s, um, you know, what Brad did with United Waste, United Rentals, and we all realized, gosh, you know, he’s certainly, he’s certainly the guy to do it if anybody can do it. And, and, uh, after you quickly get to know Brad, um, you know, he is just the— has the highest work ethic or strongest work ethic of, of anybody I’ve ever, ever met. Um, incredible vision. Um, and he’s just really a very focused, uh, individual. Um, there’s, there’s no one I’ve seen that’s more focused once he gets a mission on what he wants to accomplish. And he surrounds himself with incredible talent. Um, I think we’ve, you know, I know you know a lot of our alumni, uh, from an XPO perspective are scattered throughout the industry doing great things. And he, you know, Brad has a, is a great keen eye for talent. He always surrounds himself with A-players. And, uh, and then everyone gets on board and goes after that mission. And he’s just relentless, uh, you know, relentless after that mission. We did 17 acquisitions in 6 years. It, you know, to say that we were all drinking through a fire hose was, um, uh, would be, uh, you know, kind of, uh, would be an understatement. Um, you know, we used to joke around that we’re building the plane, um, as we’re flying it all the time. And, uh, you know, but it was, it was an incredible time. Um, and, you know, it was you know, certainly chaotic at times, but amazing that Brad and the leadership team, and which, you know, I was part of at the time, was able to keep everything on track. And one of the things we forget about with the acquisitions, all the acquisitions we did, we had incredible organic growth during that time, double-digit organic growth every year, even, even with the incredible acquisitions and the synergies and the cost savings that we drove and the incredible shareholder value. Um, we had, you know, really, really strong run on organic growth because we were able to take all those services, put them under one brand, and make them very attractive, uh, for the customer base out there. Which, at the end of the day, you have to sell something. Uh, you know, uh, you know, it’s what I always say, you do nothing happens till you sell something, Craig.
Speaker 1 [14:33] Yeah, no, it’s true. I mean, I remember the early story of XPO was that you were going to roll up freight brokers. Non-asset freight brokers. That was sort of Brad’s vision that he laid out to Wall Street. And there was a massive pivot when he bought Conway. What was the driving force to go from, hey, we’re going to roll up brokerage, which I think in hindsight probably wasn’t as attractive as owning an asset-based operation in a roll-up business. What was that like? What was the evolution? When did that sort of become obvious that that was the direction? Because assets just were not on the radar at the time that he founded what is now the XPO network of companies.
Speaker 2 [15:19] No, you’re 100% right, Craig. When I first met Brad, his vision absolutely was an asset-light model. And we did the 3PD acquisition, which got us in the last-mile space. We did the Pacer acquisition, which again, you could call asset-light because it was mostly owner-operator contractors. On the dray side and owning some containers. And then you had the New Breed acquisition, which was warehousing. And I think that led him to the Norbert acquisition. And when we did the Norbert Duntersangla acquisition, sorry for my poor French there, I think what Brad realized at the time was when he met some of Norbert’s customers globally and the position that they had, they had an asset-based trucking division that was located in all of Europe. I think XPO still owns that division, which handled LTL and truckload. I think he saw the seat at the table that Norbert had with their customers offering that wide range of services. And I think we initially had had some discussions with Menlo on acquiring them because that would’ve fit perfectly in the portfolio from a managed trans perspective. But then when you looked at, you know, the Conway was part of that acquisition because that fell underneath that umbrella. I think we were a little reluctant, but I think when Brad— again, Brad saw that, um, that, that, that the opportunity with Norbert and the opportunity to, to grow market share and really deliver shareholder value, I think that’s where we jumped on it. And then I, I actually led sales on the XPO LTL side, um, you know, after the Conway acquisition for a couple years there. And, you know, it was the biggest driver of EBITDA. And, you know, Mario now has taken that to all new heights and done an incredible job with XPO. And I’m, I’m a shareholder there, so keep going, Mario and team. They do an incredible job. But I think, you know, the big thing was, is you could deliver a lot of shareholder value. That network was, you know, we could be maximized from utilization standpoint, drive the yield and volume through that network and really drive a lot of cash flow and a lot of EBITDA. So I think that was, that was really the big pivot. You know, the shareholders reacted. I think at one point they were a little pushed back a little bit, but I think they were rewarded in the end.
Speaker 1 [17:31] Yeah, I remember it selling off, I think, when there was a realization of that, hey, this is a pivot from brokerage. But one of the more interesting things was CFI was a part of that business at one point. If anyone wants to know about whether truckload asset-based truckload is an investable asset, the most prolific investor in our industry, the only asset that he sold off was CFI’s truckload business. That should tell everybody. Was that a surprise to you guys or was that a part of the original plan?
Speaker 2 [18:02] No, I, I don’t think that was original part of the plan. I think it just, I think it just worked out. I think similarly to, um, you know, the Pacer, uh, when we, we, when we spun off what was the XPO Intermodal, uh, to now STG, I think there was just a good opportunity to sell it in the market. And it really— neither one of those, uh, or I should say the CFI, um, at the time, it, it just didn’t fit as well as the other acquisitions from a truckload standpoint. I think when you have a large truckload brokerage, I, I, I think there’s Sometimes there could be, you know, an overlap in services there, and it just wasn’t crystal clear to the customer the value you’re providing. And as you know, you know, the operating ratios on those is not as attractive as some of the other modes. So I think, you know, we had a lot of small businesses.
Speaker 1 [18:49] Dennis, I know it painfully well. We know it painfully well. I know it painfully well. My dad built, you know, a $2.5 billion corporation. Julie was an executive there. And man, when you’re talking a couple percent on a good year, it’s brutal. And these other businesses are far more attractive. And LTL managed trends, just so much more attractive on return on assets, return on capital. So no surprise, but it tells you everything you want to know about— because there was a question I remember when XPO, when Brad was rolling up stuff, would he roll up the truckload industry? Certainly, my family included, every CEO of a publicly traded truckload carrier or large truckload carrier was hoping he would because he was paying, at the time, top valuations. In hindsight, it looked cheap, but at the time, it was like, yes, let’s go. Maybe he’ll sell it. He’ll buy these things for 12 times.
Speaker 2 [19:43] Yeah, I think the asset-light model, the interesting thing that also, from a pivot standpoint, when you look at the brokerage networks and the companies that were operating brokerage to roll up a bunch of brokers was going to be a bit of a challenge as well, kind of going back to our Conway discussion. Because when you look at brokers, they— when they overlap, you often have a lot of the same customer base. Um, so there wasn’t sometimes a whole lot of value. Now, it was interesting with RXO when we did the Coyote acquisition, we actually had very little overlap with those guys. Um, you know, I think roughly 30%. We were, you know, RXO was very heavily interested in or heavily invested in the automotive sector and retail sector. Retail sector, I think, comes from having that connectivity on the last mile front. You know, our customers look at us, you know, you tend to build those relationships organically through, through kind of those shared service platforms. But when you look at, um, when we had, uh, you know, when you look at the Coyote acquisition, again, we also only overlapped, I think, roughly 30% even on the carrier footprint. They had a whole different carrier footprint than us. So that was kind of unique in the brokerage space, but very difficult to overlap 2 brokers and get the value that you want. So I think, you know, I think that was part of it. And then on the asset truck side, yeah, I don’t think— I think it would be— would have been interesting maybe to go after some more dedicated contract carriage or possibly some other assets that are very maybe niche. But going after full truckload business, I don’t think we wanted to compete in that space.
Speaker 3 [21:13] So Dennis, with all of these acquisitions and this amazing enterprise offering and all of these different service offerings that you all have, how do you communicate that with your actual customers to find the fit in what they need within your organization?
Speaker 2 [21:26] Well, I think, Julie, we have to listen at the end of the day. You really, you know, what I try to do is sit down with customers and understand their supply chain, you know, try to understand what are the biggest challenges they’re dealing with, where are they getting underserved, what does the next 12 to 18 months look like, then what’s on their future radar. And then we, you know, we try to go back and solution something or design something that’ll fit for them. Sometimes it’s a very small service that we’re going to offer, but small but valuable service, like in the case of, say, expedite, for instance. But I think it’s really more about listening and really trying to understand the missing— the different parts of our customer supply chain rather than trying to just, you know, as in the old sales world, show up and throw up about your services. Because, you know, at the end of the day, we need to give them services that fit into their network and provide them value.
Speaker 3 [22:19] All right, Dennis, final question. So what do you see happening in the next 12 to 18 months, both with, with your business and then, uh, in the market, the freight market?
Speaker 2 [22:29] Well, I don’t think it’s gonna— I, I don’t think it’s gonna get any easier. I mean, I think with the regulatory situation, um, that’s going on in the market right now, um, you know, I don’t think the— I don’t think the government’s going to slow down on, on the capacity exits. Um, so I think if the capacity is going to continue to get tighter And, you know, if we get any volume spike whatsoever, then it’s going to be a very big challenge. But we’re, you know, we’re here to— we work in all markets. We work in the downturn. We work in the upswing like this market. And we try to figure out the best ways to help support customers no matter what, you know, what the situation.
Speaker 1 [23:03] Well, Dennis, thank you so much. Great to see you. We’ll have to have you back to tell us more of these war stories from the great archives of the RXO’s lineage. Really appreciate it, Dennis.
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