GXO is banking on AI and automation to help accelerate profitable growth as the logistics provider expects volumes flowing through its network to remain flat in 2026.
Already having deployed proprietary AI modules across its sites for about 18 months, the company will be scaling its GXO IQ logistics operating system to more than 50 sites in 2026. The company began piloting GXO IQ last June.
The tech uses AI algorithms to help its warehouse employees make decisions across inventory distribution and movement, order picking and packing, shipping and staffing.
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“There’s an opportunity to use AI to solve for the completion of repetitive tasks that our team members don’t want to do,” said GXO CEO Patrick Kelleher during an earnings call on Feb. 11. “There’s efficiency in getting those repetitive tasks done either more quickly or more cost effectively.”
Kelleher said GXO IQ is providing bigger benefits both upstream and downstream, noting that the company has leveraged AI in a large e-commerce warehouse for forecasting demand and labor planning.
“In that case, AI didn’t necessarily make the picking and processing activity more cost effective, but it made the labor planning more cost effective,” Kelleher said. “This allows us to put labor in the operation when it’s needed, when it could be most productive, eliminating team member downtime—people who are there without work to process.”
The company also has deployed AI modules for dynamic route planning and proactive replenishment, all in the name of driving lower costs and better productivity.
GXO expects to have nearly 20,000 robots in its global operation by the end of 2026, alongside several humanoid robotics pilots across the U.S., the U.K. and continental Europe.
More than a week after the earnings call took place, GXO made some additional cuts to bolster its bottom line. The warehousing company will lay off 185 employees at its Memphis, Tenn. distribution center.
The company said the layoffs will take place between April 3 and May 31, according to an official Worker Adjustment and Retraining Notification (WARN) Notice filed with the Tennessee Department of Labor and Workforce Development on Monday.
A local ABC affiliate said GXO is shuttering the 366,000-square-foot facility. GXO has not confirmed the closure.
The employees at the Memphis facility are not represented by a collective bargaining agreement and do not have bumping rights.
The Greater Memphis Workforce Development Board’s rapid response team, employed by the Memphis Chamber of Commerce, has been notified to coordinate services with GXO and affected employees.
Class-action law firm Strauss Borrelli PLLC is investigating GXO regarding the layoffs and whether the company violated the WARN Act. The probe will investigate whether the company provided the federally required 60 days’ notice before the layoffs take place.
The Memphis layoffs follow the anticipated closure of a warehouse in Romeoville, Ill., with a warn notice filed with the state indicating that 32 employees would be permanently laid off on April 4.
GXO also exited a 648,000-square-foot Memphis distribution center back in early 2024, after its partnership with Disney ended. The contract logistics provider laid off 211 employees with the closure.
For its fourth quarter, revenue at GXO increased 7.9 percent to $3.5 billion year over year, with organic revenue growing by 3.5 percent.
Net income was $43 million, down from the $100 million generated in the fourth quarter 2024. Adjusted diluted earnings per share (EPS) was 87 cents, compared with $1.00 the year-ago quarter.
GXO’ expects its organic revenue to tick up again slightly to between 4 percent and 5 percent in 2026, while adjusted diluted EPS ranges between $2.85 to $3.15. The midpoint of the range represents a 20 percent increase over adjusted diluted EPS in 2025.
According to Kelleher, the guidance for flat volumes follows the uncertain macroeconomic environment projections for 2026.
“We’ve taken a very conservative view there with respect to current customer volumes, so the lever for this year is really about organic growth driving top line,” Kelleher said.
Given that the U.S. is GXO’s “largest and most immediate growth lever” to accelerate organic growth, said Kelleher, the company expects North America to play a central role in its expansion going forward.
The CEO said North America offers up a $250 billion market opportunity. As of the end of the 2025 fiscal year, the U.S. made up just 24 percent of total revenue at the Stamford, Conn.-headquartered GXO. While the U.S. reeled in $3.2 billion, it still lagged behind the company’s leader, the U.K., which took in $6.3 billion in sales.
