Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision and global business. The dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week, we feature stories of those who hatch plans create jobs and harness the engine of capitalism right. Right here, right now at the NYSE and at ICE's exchanges and clearing houses around the world. And now welcome Inside the ICE House. Here's your host Josh King of Intercontinental Exchange.
Josh King:
If you want to drive as efficiently as possible from coast to coast in the United States, chances are you'll spend about six hours traversing the 435 miles of U.S. interstate 76 from Belmar, New Jersey, where it begins all across the great Commonwealth of Pennsylvania as part of the famous Pennsylvania turnpike. At Akron, Ohio. We pick up I-90 for the run to Chicago. Then I 80 for the rest of the trek to the Bay Bridge and the Pacific ocean beyond.
I-76, part of president Eisenhower's interstate highway system has its origins in 1955. But if you drive alongside hamlets like Middletown, Pennsylvania, just down the Susquehanna River from Harrisburg, you notice something different about American topography from Ike's day. Vast warehouses have sprung up along the interstate as part of a transportation and logistics network that gets your Amazon packages and your NYX fitness exercise bikes to your front door almost as fast these days as you can click the buy now button on your smartphone.
GXO Logistics, NYSE ticker symbol GXO operates one of those warehouses in Middletown, one of the roughly 900 locations around the world comprising about 200 million square feet staffed in total by about 120,000 team members serving about one in every four companies of the fortune 500. Inside that Middletown warehouse workers and robots will take the information from that buy now click and find the latest Jean Baptiste gowns and Christian Louis Vuitton pumps that your family member just ordered from Saks Fifth Avenue part of Hudson's bay company. Spoiler alert. Your Saks purchase is unlikely to come from Fifth Avenue in New York city anymore. Global retail is now an exercise in pure logistics.
Joining us on the pod today is the man behind the warehouse Malcolm Wilson, CEO of GXO who today rang the opening bell of the New York Stock Exchange commemorating the one year anniversary of the company's IPO, its birth a spinoff from XPO Logistics. That's NYSE ticket symbol XPO. Our conversation with Malcolm Wilson on GXO's first year as a public company. The biggest trends in logistics, and using technology and a focus on ESG to get the best outcome for customers. That's all coming up right after this.
Speaker 3:
Connecting the opportunity is just part of the hustle.
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At ICE, we connect people to opportunity.
Josh King:
Our guest today Malcolm Wilson has been the CEO of GXO Logistics Inc, New York Stock Exchange ticker symbol GXO since it's been from XPO Logistics, which I bet the listeners know or can guess trades here on the New York Stock Exchange as ticker symbol XPO. Prior to the formation of GXO he's served as the CEO of XPO Logistics Europe. Malcolm joined XPO after its acquisition of industry leader Norbert Dentressangle. Welcome Malcolm Inside the Ice House.
Malcolm Wilson:
Thanks Josh. Thanks for having me on the show.
Josh King:
There's a big chant from your team on the floor a few hours ago, as you rang the opening bell. How did it feel? It was quite a contrast from a year ago when a cardboard cutout of you nicknamed flat Malcolm did the honors in the COVID limited.
Malcolm Wilson:
Yeah no, it felt great. And it's great to be here today to celebrate what has been just an incredible, a tremendous year for GXO. We feel like we've accomplished so much in one year.
Josh King:
Tell us about the flat Malcolm scheme. I hear that flat Malcolm has taken up residents in your office at GXO headquarters in Greenwich. Were you tempted to bring them today? And is this the first time you've been to the NYSE sets?
Malcolm Wilson:
No, no. I've been here on a number of occasions in the past. But just as a recollection last year in, August European people weren't actually able to travel to north America. That was the remnants of the pandemic. I mean, it just shows us what has changed over the past two years, how the world has changed so dramatically. But it was extra special and extra nice to be here today with the team in person.
Josh King:
It was great to see you guys. Made a lot of noise, interrupted CNBC for a while. That's what we always want to see.
Malcolm Wilson:
Absolutely.
Josh King:
The warehouse that I referenced in the introduction in Middletown, Pennsylvania, is that indicative of your 900 other global locations? Assume I park outside the front door or pull up to the loading dock. What do I find when I wander inside?
Malcolm Wilson:
Yeah. What you'll see is really a very high tech environment in pretty much the warehouses that we established today, we have 900. So of course we still have some more manual facilities, but for the past few years, everything we set out to do, all the new warehouses that we implement for our customers, they're full of tech enablement. Goods to person robots, collaborative robots, deep picking stores, robotic arms. So it's a real high tech hub. And what we find is that environment allows us to prepare orders very efficiently, very productively, very safely as well. The warehouses, we like having a lot of equipment in warehouses. So it's very good for the industry.
Josh King:
Working with a company like Sachs or NYX Fitness, what are your customers looking for when they sit down with a guy for instance like Bill Fraine, your chief commercial officer. Looking for a solution to the problem of declining shopping malls and our needs as consumers for nearly instant gratification.
Malcolm Wilson:
GXO, we solve problems. Customers come to us with a problem. It might be that their existing infrastructure isn't capable. It's maybe outmoded, it's outdated. It's not capable having the capacity to handle the business that they're expecting to do in the future. And normally, they'll provide us with a huge amount of background information that we use to model and design the warehouse, warehouse of the future in respect. So effectively, that's what we are doing. And that very warehouse that you're referring to. That's the process that went through.
Josh King:
Let's go back to January, 2020 I think when Brad spoke with CNBC's Jim Cramer, who's just begun his mad money residency here on the floor of the New York Stock Exchange. Let's take a listen.
Jim Cramer:
Brad, people have made fortunes with your stock. I mean, it's up more than tenfold since your investment in 2011. Why now? And does it necessarily mean that you're done?
Brad:
No, we're not done. So first of all, thanks for having me on. So the stock has performed very well. It was the seventh best performing stock of the Fortune 500 of the last decade. But we're still getting a low multiple. So as a diversified company, the market's only giving us a eight or nine times multiple. When you look at what we would get if we sold off or spun the four of our business units, each one of those as a smaller pure play would get a higher multiple.
Josh King:
So Malcolm, beyond what Brad told Jim, what was the rationale for GXO to spring like a Phoenix from Brad Jacob's vision hatched in 1989 for a freight transportation company?
Malcolm Wilson:
Yeah, it's all about focus. So we work predominantly in the warehousing environment. We're not a transport company. We're focused on what happens in the warehouse. And we realize that by focusing management's laser focus, that's all of our attention on what happens in the warehouse for our customers, we could bring more innovation in terms of technology. We could bring more innovation of speed of deployment. And really, that in itself has created the environment where GXO has been such a huge success over the past 12 months. The records actually speak for themselves. In that last 12 months, our first 12 months in fact, we've opened 90 incremental high tech hub warehouses. We signed over 400 new customer contracts, and we've grown employment. We've actually added 15,000 new team members into our business. And apart from that, double a rating and SCI for ESG. And to cap it all off, we've just undertaken a big M&A, big M&A deal in Europe. It's kind of been a very exciting first 12 months.
Josh King:
What are the puts and takes of making a decision to open these new locations? One that might in the Middletown example be situated along Interstate 76. You have a real estate team or logistics teams thinking about where you've got a gap along the chain?
Malcolm Wilson:
Yeah, the starting point is the customer, the customer's data. We analyze in great detail where the customer wants to reach, what the consumers that the customers want to reach might be a facility that's just focused towards West Coast, might be Midwest. It might be East Coast. So we take all of that data. We work with the customer to understand in really great detail what it is they're trying to achieve. And that's what drives the design. After that, it's really a matter of looking at where the right real estate is. Obviously GXO, we're one of the largest renters of industrial warehousing in the world. So we collaborate closely with all the big industrial landlords. So we know what properties are available, and that's what really guides then where will decide to put that capacity in place.
Josh King:
So based on Brad's thesis about finding out how to make the people who laser focus on the pure plays, why were you the guy to take over the GXO mandate?
Malcolm Wilson:
Well listen. I think my track record in the industry speaks very soundly. The track record of success. I've grown businesses have been involved in lots of M&A. But importantly as well, I understand GXO, the culture that we've tried to develop. We have a culture in our company. It's about people. We like to work hard. We do work hard at being a great place for people to work in. And that's very important because people, even with all of this automation and robotics, we're still working with 120,000 team members. So it's vital that we have a great track record, that we're seen as a super employer, and that we work hard at that.
Josh King:
So both capital formation and logistics, they one time found a home here on the corner of Wall and Broad Street centuries before technology transformed, how both disciplines operate. Where the exchange actually sits today, where you and I are sitting was a major cog in the supply chain moving material to and from Europe, South America, North America. Where did your own interest in the industry stem from? Is there a Wilson family history in shipping?
Malcolm Wilson:
Yeah, in fact no, there's no history in the family. But my input to this industry goes a long way back. And in that time I've lived all over the world, in Asia, in Japan, here in north, America spent some great years in Racine in Wisconsin. Bit cold in winter, but it was super. And always working in this industry. I kept myself as an industry expert.
Josh King:
Before you got into this specific industry, in 1990, you joined Massey Ferguson Tractors, which is now part of NYSE listed agricultural machinery manufacturer AGCO. What was the opportunity you saw then, and how did that first job overseeing logistics on both sides of the Atlantic start you on the track to lead GXO?
Malcolm Wilson:
That that role probably was one of the first roles that enabled me to see just the different dynamics of different markets, of different industries working on a global basis. It was a great opportunity, a great learning opportunity. And of course, it was one of the first opportunities I had working here in North America. And AGCO has become a great company.
Josh King:
Your career then went to logistics for automotive, consumer goods before joining the firm that would bring you to XPO. How has the industry changed over your career and how did the roles that you had help you understand what clients from varying industries needed to complete their work?
Malcolm Wilson:
Our industry has gone through a real revolution over the past I would say five years, everything has changed. So people would've historically thought about warehousing as being rather dull. Today, it's not dull. If we have an entrance of graduates coming into our business, we can take our pick of the highest caliber of people coming out of the universities. And that's because the industry is seen as a technological industry. People want to be associated with modern technology, cutting edge. And that's what goes into our warehouses now.
So the industry's become very exciting. And I think on top of that, the pandemic, I think showed the whole world just how important supply chains were. Just how important having a warehouse that could operate in the most severe environments. And that's what GXO was able to do. We were able to keep our warehouses running, obviously with the highest level of safety regimes. But we were also able to do that because there's so much automation in our facilities.
Josh King:
Logistics and supply chain management have long underpinned the economy, Malcolm. But they've really moved to the front of people's thinking over the pandemic, as you just mentioned. Look, I was part of the backlog that took an eternity to get my Peloton Tread Plus to my home in upstate New York in 2021. Do you think that discipline is finally getting the appreciation it deserves now that everyone can see the impact of even a minor disruption in the supply chain that can have ripples months later?
Malcolm Wilson:
Yeah, I do. And I see that in a number of different ways. But one of the most obvious is I see that companies that we work with, historically, they might have wanted to make an agreement for maybe three or five years. But now, they realize that working with a partner it's really, you have to do it for a long period of time. For that reason, contracts nowadays tend to be more like five or 10 years. And by doing that, you really become an integral part of our customer and our customer supply chain. So we really work so closely together. And it has to be like that to maximize all of the benefits that come from these collaborations.
Josh King:
If your clients are setting their needs and their processes for maybe half a year or more, or multiple years, as you just said about forecasting their needs. Does that mean GXO is looking even further beyond the horizon? How do working with state and local governments? You mentioned your original work in Racine, Wisconsin, or the one in Middletown, Pennsylvania help or hinder the challenge of figuring out how to make all this chain work.
Malcolm Wilson:
Yeah, of course. We are in tune with what is happening. In Europe, obviously it's a multitude of different legislations and different governments. Here in North America, we're right in tune with the latest thinking that can involve maybe at the moment, there's a definite trend for nearshoring products that historically could have been manufactured and housed in warehouses a long way away. Maybe in Asia. A lot of organizations are bringing them closer to home, even in Mexico or even here in North America. Things that we've done, customizing of products that historically might have been looked upon as a manufacturing process are becoming a warehousing process. And the benefit for the consumer and the customer of that is in fact, you are really saving a huge amount of inventory holding. That's good news for everybody. Puts the product closer to the consumer. Instead of us having to wait a week or so for an engraving on a watch, we get it the next day, just as if it was coming from stock, but it's got our name on the back.
Josh King:
Major economic indicators like employment, interest rates tend to trail what's happening in real time. Based on your vantage point, do you think consumer trends are being accurately captured by those numbers?
Malcolm Wilson:
Yeah, I do. Because at the moment, when I look at the different indices, it's kind of easy to draw a conclusion that the economies are slowing. But actually, if I look at the reality that we see as a company, what we see is across all the markets that we are working, whether that's in Europe, whether it's here in North America. We're seeing continuing big demand from big blue chip international organizations who are investing for the future.
So they're kind of investing now for the capacities, the throughput capacities that they're going to need not really in '23, but more like '24, '25, '26. Those are the projects that we're actually deploying right now. We just had an amazing quarter of record sales, just under half a billion. Most of that implementation work is only going to take place in '23. And some of those even in '24. And that's because there's a lead time, and maybe we're doing a design build on a facility. It's got a lot of automation in. So it's products that generally, they're not available off the shelf. We have to order them, because they're being designed in part for our use. So I see that is front and center. And that's giving me optimism about the future. I'm sharing the same optimism as our customers.
Josh King:
Talking about '23, '24, '25, and 2026. After the break, Malcolm Wilson, the CEO of GXO Logistics and I will discuss how GXO is helping clients prepare for that future meeting. Their logistics needs by improved service and deploying new technology. That's all coming up right after this.
And now a word from Stellantis. NYSE ticker STLA.
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Josh King:
Welcome back. Before the break, I was talking to Malcolm Wilson, the CEO of GXO Logistics about the launch of GXO and some of the macroeconomic indicators affecting the current state of logistics. Malcolm, as we begin the second half of our conversation, let's drill into some of the issues driving those trends. Yahoo Finance, published an article today to raise alarm bells over what it termed the bull whip effect, where months of delivery delays to the U.S. warehouses have led to over ordering perhaps and now inventories perhaps overflowing and warehouses being filled. Are GXOs distribution centers filled? And is this something that you're concerned about?
Malcolm Wilson:
Right now, we have a more elevated level of inventory at this time of year than we had in 2021. But you have to contrast that 2021 was quite dire. We all remember those stories and seeing all those vessels off shore at Long Beach. They couldn't even get in to the port to discharge their cargos. What we're seeing now is that is alleviated. There is a little bit of outer balance I think, with some organizations. And what I mean by that is the pandemic was still actually there in Asia. So it was disrupting manufacturing not that long ago. So there's no doubt that some cargos that were arriving maybe around March, ideally would've been arriving maybe in January.
And I also see a situation whereby big organizations, they did take notice of those disruptions in 21. They ordered a little bit earlier for the holiday season. So easy for me to see when I visit our warehouses, stock. That typically would ordinarily be arriving maybe in September, it's coming in now. So I don't think it's a dramatic outer balance. I think it'll find its correct level as we go into the holiday season, which is typically the window that organizations use to right size their inventory levels.
Josh King:
As the next step, along the way from the stop at the Port of Long Beach, where the cargo are offloaded to one of your warehouses, looking into the crystal ball of 12, 24, 36, 48 months, where do you see this sort of growth of autonomous trucking beginning to be an answer to some of the issues of getting from point A to point B?
Malcolm Wilson:
Yeah, I think there's a place for it. I think if I look around all the different locations GXO is working in, here in North America, I think there's lots of opportunity for that. I think it's still early stages. I think state by state, different legislations. In Europe, it's pretty much the same. Finding a common theme by country by country is very, very difficult. But there's no doubt autonomous trucking is definitely coming along.
Josh King:
I mean, speaking of running outta space in those warehouses, the tightness of the labor market has hit all sectors. In an interview in November, 2021, about eight, nine months ago, you said, and I'm going to quote you here. "In normal times, it would be acceptable to review wages and incentives every six months. Now GXO is reviewing those plans every other month at some locations." Malcolm, how has labor impacted your business? And do you see that as a headwind, either locally in the United States or globally?
Malcolm Wilson:
I'm not seeing it as a headwind. And I'm not seeing it because actually we're able to attract the right talent. Talent is the most important comment there. You are right. In 2021, we moved much more quickly in terms of reviewing labor wage levels by region. Even by city zip code. We were reviewing very regularly every few months. We've actually carried that process on and we've done that for good reason because the labor market, although it's eased a little bit, it's still actually... in Europe here in North America. There's very high levels of employment. So people have a choice of where they work. And typically, people when they're choosing, they're looking for a company that's got good values, it's got good conditions, great restroom. All these kind of things matter a lot to all the people who work for our company. And of course, they want an environment where they're in amongst modern way of working technology. People like to work with winners. And I think there's no surprise that we are able to attract the right talent.
Josh King:
Values, conditions, cleanliness of restrooms. And of course pay. All major reasons people apply and stay on a job, but not the only ones. It's easy to see looking at GXO's Twitter feed that employee happiness and inclusivity for example, supporting pride month and partnering with groups like Leading Executives Advancing Diversity is a major part of GXO's culture. Let's hear from three of your people in Derby, in the UK, working on the Ted Baker account. Here's Richard, Lee, and Nikki.
Speaker 19:
With so many opportunities in the local area, why would you want to come and join GXO Derby? Working with our customer Ted Baker. Well, I could tell you, but let's go and ask the team.
Speaker 20:
I started my journey here just under two years ago as an agency colleague. And in the last 12 months, I've progressed to senior operative. And now my current position as inbound section manager.
Speaker 19:
Before I joined GXO Ted Baker Derby, I was in the army for 28 years. The transition from the army was really, really tough. But thanks for all the great colleagues here at GXO. They made it really, really easy.
Josh King:
I was looking at that video Malcolm, and Lee was playing some billiards in the Ted Baker area. And also some foosball. Couldn't look happier. What impact on attracting and retaining diverse talent have your initiatives had?
Malcolm Wilson:
I think there's no doubt it's allowed us to attract, but retain talent. It's a competitive marketplace. People can work where they want to work, and always there's people hiring. So it's not just attracting people, it's actually retaining people. And we do that. Great to hear one of those team members talking about the fact that he joined the company and he progressed through promotion. This year, we've promoted in the range of about 900 individuals into new job roles, promotions. We've trained them. We've got them ready for those promotions. It's a kind of very good environment. It's one of the reasons people like to work for the company, because they can see that the hard work is rewarded by future opportunities.
Josh King:
GXO has long been on the front foot not just on social issues, but for all of the ESG efforts in your industry. You were mentioning it earlier, according to MSCI, it earned the highest marks among industry peers in 2021. Can you talk about how the company set about to create its inaugural ESG report in its first year and really some of the benchmarks that you highlighted?
Malcolm Wilson:
We've made it an integral part of the company culture. So when we are designing a new warehouse, we're mindful about everything, sustainability, all the key aspects. When we're designing, how we're employing, how we're training people, everything is geared to make sure that we're taking note. We're really taking note of all the aspects that go into an ESG environment.
That's vital also for our customers. So many of our customers, it's so high on their agenda. And when they choose to work with GXO, it's the entry card to the game, having a very high level of ESG orientation in the company. So it's helping us win business, but it's also helping us do the right thing.
Josh King:
Talking about your customers, you describe GXO as a pure play logistics company. Let's bring that definition to life in another one of your clients, barbecue guys. A GXO customer that flexes out its operations to meet its seasonal demand like Memorial Day here in the U.S. When we're all thinking about grilling stakes out back. Let's hear from Russ Wheeler, the CEO of BBQGuys. It's COO Byron West, and some of the members of your team that support that account.
Speaker 21:
BBQGuys is a online platform for outdoor living and everything you want to do for enjoying your backyard with family and friends.
Speaker 22:
Being an e-commerce company, it's critical that we have a trusted partner like GXO Direct.
Speaker 23:
We started up the BBQGuys warehouse, estimating they would need a footprint of about 65,000 square feet. It's actually now 110 and they need more.
Speaker 24:
We tripled our operations with GXO in the last year.
Josh King:
Malcolm, talk about the business model for GXO direct that allows a growing company like BBQGuys. We just heard them to access anywhere between as your team members said 65,000 square feet, and now I guess 200,000 square feet of warehouse, depending on their order flow.
Malcolm Wilson:
GX or direct. It's a very innovative, it's a great model. What we're effectively doing is we're allowing organizations, maybe you're a company that's based east coast, but you want national coverage. We're allowing them to get their orders, take their orders, and effectively offering almost the next day service to their customers, no matter where they are across the U.S. We're going to bring that service also into Europe.
The big benefit it brings our customers is they have one view of inventory, which obviously makes life very easy in terms of keeping websites up to date for the consumer. And they have a standard high level of service. So service is consistent everywhere we work. And of course they're in a flexible environment. So as their inventory moves up and down, we can flex accordingly. It's been a winning formula for it. And we're really looking forward to launching that same process, that same service across all of our European business. We're equally expecting this to be big demand.
Josh King:
The article Malcolm that I read on BBQGuys didn't go into what technology their operation uses to improve performance. But how do you deploy artificial intelligence like operator eye to achieve better outcomes?
Malcolm Wilson:
Yeah. So in terms of artificial intelligence, starts with all the data analytics. So we're using data analytics to interpret the order bank, to interpret the forecast. Sometimes our forecasting is very, very accurate. So that helps us to map out capacities. And then when we're in the actual warehouse, it's just a huge variety of tech, pretty cool tech that we're using. And mainly, I have to say it's kind of the collaborative robots. It's close to person robots, robotic arms. These machines do the different work streams that we're asking and putting in. It can be de-consolidating, it can be packing. All kind of manner of different activities, but they do it very accurately, very efficiently. And it's one of the ways in which we're able to move relatively big volumes through the warehouse, very productively.
Josh King:
Drilling into the robots a little bit more, part of the wall street journal article that I read about Saks talked about how they're using robotics and co-bots. What are co-bots, and how do they improve operations? As well as you said, the beginning of our conversation, create a safer workplace for your human employees.
Malcolm Wilson:
Yeah. They take the strain away from us humans. That's the easiest way to look at it. So collaborative robot, it's a machine that travels with the person. And in fact, it's effectively helping the person ensure that they collect the right item from the box and that it scans. So it's super accurate. It's one of the machines that allows a high, high level of accuracy in terms of what's being dispatched out to the consumer. But I equally, it's taking the strain. It's taking all the weight, nobody's pushing a cart any longer. And by doing that, by introducing that kind of technology, effectively, you're making life a little easier for the person. But also, you're making it safer because it's taking you on a pre-prescribed route around the warehouse, keeping you safe. It's helping you understand what you're doing. And it's ensuring that what you're doing is very, very accurate.
Josh King:
Bring us into the innovation offices of GXO, the engineers and the experts that you work with and how they're organized to sort of keep surveying the environment and the landscape for the best new technology out there. In July, GXO partnered with six river systems to increase its use of mobile robots. How's that agreement with Six Rivers going to help build your capabilities?
Malcolm Wilson:
We're partnering with many different manufacturers. The Six Rivers arrangement is a really good one because it's a nice piece of equipment. It suits our operatives, it suits our team members. And it's proven technology. We like using that very much. So we are rolling it out across multiple different locations, and with great success. And of course, once you're trained on it, you can work in different locations with the same equipment. So we are very happy with that arrangement.
Josh King:
I mean, how much of your own personal time do you spend geeking out on the newest offerings that do you make time to just sort of wander into manufacturing facilities of some of these partners of yours and say, "What do you got for me?"
Malcolm Wilson:
Yeah, well, we have our own tech center in as much as we have our own teams who are always continually looking for the very latest technology. And that doesn't have to be machines. It doesn't have to be a robot. It can be very sophisticated scanning equipment that really speeds up the operation. We always have to think when we're handling big volumes of activity, maybe we're handling 100,000 pieces an hour or 100,000 pieces in a shift. If you save just a few seconds on each of those things, which you can do with technology, then you are really bringing an important benefit to GXO. But also to our customers.
Josh King:
GXO is also deploying robotic security forces using Asylon's drone core security program. When I think about security drones, my mind drifts to Disney fantasy worlds of Marvel or Star Wars. What does it look like in the here and now as you actually put it to work?
Malcolm Wilson:
Some of the big facilities that we have, there are hundreds and hundreds of thousands of square feet, millions of square feet. Have huge parameters. So having a drone that's autonomous, that can make its way around, it's doing security checking. It also helps us identify trailers in the yard, which trailers are parked where. Some of our centers are really, very, very big. So this equipment is a really helpful aid for our security teams. It's keeping our sites safe. And that's important.
Josh King:
We talked about this at the very beginning, talking about your expertise in mergers and acquisitions. And as we wrap up Malcolm, GXO recently completed its acquisition of clipper, which was a target for you. And I'm curious will M&A remain a key part of your growth strategy?
Malcolm Wilson:
Yeah. The best use that we have for our capital, our financial capital is we put it back in the business. Because the company gets an incredibly good return on capital invested. But at the same time, we're working in an industry that is consolidating. There's no doubt about that. You can look at 21 at the various deals that were taking place. In '22 Clipper for us, it's just an amazing deal. It's an amazing company. It's giving us access to some new geographies. It's putting us into new verticals. So an important vertical for us is health, pharmaceutical healthcare. It's also putting us into new services. One of the activities that Clipper undertake is a repair technology service. Might sound a bit old had, but actually it's very vital and it resonates firmly with ESG in terms of sustainability. So all of these things are coming with Clipper. Not to mention of course, we're putting two big businesses together in the UK. There's going to be a lot of cost synergies come from that deal. And also top line, there's oddly any crossover of customers. So we're expecting a tremendous amount of top line sales synergy coming from the deal.
Josh King:
Speaking of new geography as an expansion, you recently announced a strategic plan to grow your foothold Malcolm in Germany. Why is this country of particularly interest and where else are you looking at potential growth?
Malcolm Wilson:
Well, Germany's very interesting for is it's Europe's largest economy. And in fact for GXO, we're not really present in it. The Clipper deal when we put the Clipper business in Germany together with our own business, which is rather small, for the first time, we'll have a meaningful business, meaningful team of people that is capable of going out and winning a new business. And it's a market that's really crying out for a new interest. So we're very excited about the work that we're doing and what we're going to achieve in Germany. We think it'll be very positive for the company.
Josh King:
So in this little tour around the world that you and I have had Malcolm, we covered a lot of ground from robotic helpers, to AI, to ESG. Projecting across the next few years, what do you think is going to be the biggest disruptor to the supply chain?
Malcolm Wilson:
I think it's going to continue to be technology just as it has been over the past few years. Technology's changing the way we look at how we do things, how we do storage in our ways. I think for GXO, technology's going to be at the forefront of our agenda. We're going to continue and double down more investment in it because it's making us a smarter organization. It's allowing us to provide services to our customers that our peers cannot do. It's differentiating in that regard. I think technology is the key ingredient for GXO.
Josh King:
Technology a key ingredient for GXO. Last year, 12 months ago, we had flat Malcolm ringing the bell of the New York Stock Exchange. Today, we have real Malcolm ringing the opening bell of the New York Stock Exchange. Great to have you here. Thanks for coming. Best of luck. I hope we come back for the second, third, fourth and fifth anniversaries.
Malcolm Wilson:
Thanks Josh. Thanks for having me on the show.
Josh King:
And that's our conversation for this week. Our guest was Malcolm Wilson, CEO of GXO Logistics Inc, NYSE symbol GXO. If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or question, you'd like one of our experts to tackle on a future show, email us at [email protected] or tweeted us @icehousepodcast. Our show was produced by Pete Ash with production assistance and engineering from Ken Abel and Wolf. I'm Josh King, your host signing off from the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
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