US XPress Nixes US-Mexican Border Business

US XPress Nixes US-Mexican Border Business

February 9, 2019

U.S. Xpress is reducing its U.S.-Mexico cross-border investment. The move will improve consolidated operating margins.  According to the company, relationships with its former partners in Mexico will continue to enable cross-border service for customers “as a variable cost alternative”.

U.S. Xpress started the exit from its fixed cost investment in the cross-border business by selling off its Mexican entity to existing managers.

In the coming months of 2019, U.S. Xpress will close its trucking terminal in Laredo, Texas, and dispose of 700 dry van trailers. It will use network optimization to reposition 300 domestic tractors, which currently carry loads to and from the border, into more profitable routes.

This post is based on the SupplyChain247 article, U.S. Xpress announces exit move out of U.S.-Mexico cross-border business, by Jeff Berman, January 25, 2019. Image source: Dave Moyer.

Discussion Questions:

1. What are the driving forces behind the U.S. Xpress decision to exit its U.S.-Mexico cross-border business?

Guidance: The company has stated that the decision is to improve its consolidated operating margin by divesting low-return U.S.-Mexico operations. That will improve the company’s core U.S. operations, and provide higher cash flows and profits.

2. How does U.S. Xpress plan Continue reading