Logistics · Deep dive

RXO

The tech-forward truck brokerage Brad Jacobs carved out of XPO in November 2022 and handed to 41-year-old Drew Wilkerson — now North America's third-largest freight broker after the all-equity $1.025B Coyote Logistics purchase from UPS, running ~$5.7B of 2025 gross revenue through the RXO Connect platform on razor-thin, cycle-crushed margins (adjusted EBITDA of just $6M in Q1 2026) while betting everything on operating leverage into a freight recovery.

at risk

RXO has real scale and a genuinely digital platform, but three years of freight recession stripped it to near-zero EBITDA and exposed the core problem — brokerage take rates are competed, not owned, and neither scale nor software has yet proven to be a moat in a business where C.H. Robinson out-earns it, TQL out-grows it, and AI threatens the spread itself.

My take ★★ Very interesting ★ Interesting − Maybe ✗ Not interesting

Snapshot

RXO is the asset-light freight brokerage Brad Jacobs spun out of XPO on November 1, 2022, and the September 2024 acquisition of Coyote Logistics from UPS for $1.025B made it the third-largest provider of brokered transportation in North America — roughly $5.7B of FY2025 gross revenue, ~10,000 shipper customers, and a network of 100,000+ independent carriers matched through its RXO Connect platform. It is the cleanest public test of whether scale plus software creates durable economics in truck brokerage: three years of freight recession compressed adjusted EBITDA from ~$283M (FY2022) to ~$109M (FY2025) to just $6M in Q1 2026, even as management raised Coyote synergy targets past $70M and the late-stage sales pipeline grew 50%+ year over year (Q4 2025). The stock has traded the debate violently — down ~55% in 2025, then up ~50% by July 2026 on signs of a tightening truckload market.

Founding story

RXO has no garage story; it has a corporate-architecture story. Brad Jacobs built XPO Logistics from a $150M shell in 2011 into a transport conglomerate through hundreds of acquisitions, then concluded the conglomerate discount outweighed the synergies and unbundled his own creation: GXO (contract logistics) in August 2021, then RXO — the tech-enabled brokerage, managed transportation, last mile, and freight forwarding businesses — distributed tax-free, one RXO share per XPO share, on November 1, 2022. Jacobs took the non-executive chairman seat and handed the CEO job to Drew Wilkerson, then about 41 — a University of South Carolina PR graduate who spent six years at C.H. Robinson in sales and carrier operations before joining XPO in 2012 to build its Charlotte brokerage hub, running all of North American Transportation from 2020. Wilkerson added the chairman title in May 2025 as Jacobs turned to QXO. The second founding moment came in June 2024: with the freight market at cyclical lows, RXO agreed to buy Coyote Logistics from UPS for $1.025B — 43% below the $1.8B UPS paid in 2015 — funding it entirely with equity from anchor shareholders MFN Partners ($300M) and Orbis ($250M) plus a ~$500M public offering, closing September 16, 2024.

How it works

Brokerage is an arbitrage on fragmentation. A shipper — a retailer, manufacturer, or UPS itself under a contract running through January 2030 — tenders a load; RXO commits to a price, sources a truck from its 100,000+ independent carriers (access to over 1.5 million trucks, per spin filings, October 2022), and keeps the spread between what the shipper pays and what the carrier costs. RXO owns almost no trucks; its assets are relationships, data, and RXO Connect, the platform XPO began building around 2011. Connect ingests tenders, prices loads with machine-learning models tuned to lane history and real-time market conditions, posts them to a carrier-facing app and load board where truckers search, bid, and book without a phone call, then tracks execution. By 2025 over 90% of brokerage loads were created or covered digitally, which is why headcount can shrink while volume scales. In Q1 2026 RXO completed migrating Coyote’s carrier and coverage operations onto Connect — one buying system across the combined carrier base, which is where the raised $70M+ cash-synergy target comes from: a bigger pool of trucks bidding on a bigger pool of loads should lower cost-of-purchased-transportation on every load. Carriers get paid standard 30-day terms, same-day QuickPay (for a fee), or instant Advance Pay, with factoring through an expanded Triumph/LoadPay relationship (2025).

Product and business overview

Post-Coyote, RXO reports two buckets. Brokerage (~74% of Q1 2026 revenue, ~$1.1B in the quarter) is truckload and increasingly less-than-truckload spot and contract freight — LTL volume grew 31% year over year in Q4 2025 while full truckload fell 12%, a deliberate mix shift toward steadier, smaller loads. Complementary Services ($388M in Q1 2026) has two pillars: RXO Managed Transportation, which runs shippers’ entire freight operations for a fee and feeds loads to the brokerage (over $200M of new freight under management awarded in Q4 2025, $100M+ more in Q1 2026), and RXO Last Mile, the largest big-and-bulky home-delivery network in the US — roughly 15% share of furniture/appliance logistics (2024), ~$1.2B gross revenue, reaching 90% of the US population within 120 miles. A small freight-forwarding unit rounds it out. The strategic logic is a funnel: managed transportation wins the relationship, brokerage monetizes the loads, last mile diversifies the cycle.

Business model and pricing

Revenue is booked gross — the full amount the shipper pays — which flatters the top line and obscures the real economics. The business RXO actually runs is the spread: total gross margin was 14.2% of revenue in Q1 2026 (down from 16.0% a year earlier), and pure brokerage gross margin was 11.4%, squeezed by longer lengths of haul and higher fuel. From that thin band RXO pays salespeople, technology, and overhead, which is why adjusted EBITDA margin was 0.4% in Q1 2026 versus 1.5% a year prior and ~2.5% at the FY2022 peak. Mix matters enormously: in Q1 2026 spot freight was 33% of truckload volume versus 67% contract (up from 28% spot in Q4 2025), and management told investors (May 2026) it expects contract rates to rise high-single-digits over the full year — the setup brokers pray for, since contract pricing resets upward while spot-buy costs stay soft only briefly. Pricing itself is auction-dynamic and lane-by-lane; there is no rate card. The countercyclical kicker: when trucking capacity tightens, brokers initially get margin-squeezed, then re-price contracts and expand spreads — which is why guidance jumped to $27-37M of adjusted EBITDA for Q2 2026 from Q1’s $6M.

Traction over time

The shape is unmistakable: volume resilience and platform progress, but profitability entirely hostage to the freight cycle — adjusted EBITDA fell roughly 96% from FY2022’s level to the Q1 2026 trough.

Market analysis

The US freight brokerage market was roughly $19.5B in 2025 (Mordor Intelligence, on a net-revenue basis), projected to reach ~$29B by 2030 at an 8.35% CAGR; full truckload was ~64% of 2025 brokerage revenue, and digital brokerage is forecast to compound at ~16.75% through 2031 versus traditional’s slower growth. The structural tailwind is penetration: brokers intermediate a rising share of the ~$900B US trucking market as shippers outsource procurement and the carrier base stays radically fragmented (hundreds of thousands of small fleets). The cyclical story is the one that matters near-term: the 2022-2025 freight recession was the longest in modern memory, with excess capacity crushing spot rates; by mid-2026, capacity exits and firming contract rates were signaling a turn — the entire RXO bull case is levered to that inflection. The structural bear case is newer: AI-driven pricing, quoting, and load-matching are being adopted by every broker at once (and by shippers directly), which raises productivity but may ultimately compress the take rate the whole industry lives on.

Competitive intel

C.H. Robinson ($11.56B 2025 gross brokerage revenue, Transport Topics 2026) is the scale and profit leader; its AI-automation push since 2023 turned it into the operating-leverage story RXO wants to be, and it remained solidly profitable through the same trough that took RXO to breakeven. TQL grew to $7.36B (2025) and passed J.B. Hunt for #2 — a private, commission-driven sales machine proving that culture, not code, still takes truckload share. Uber Freight wields a multi-billion-revenue platform and Transplace’s managed-transportation base but lost ~$43M of adjusted EBITDA through Q3 2025; it attacks RXO’s spot and managed-trans flanks with venture patience. Arrive Logistics jumped to #7 in the 2026 rankings, winning contract freight with service intensity. Echo/Mode and the PE-consolidated mid-tier keep the spread competitive everywhere. The spectral competitor is Convoy — $900M+ raised, a $3.8B peak valuation, dead by October 2023 — proof both that pure-digital brokerage without operational depth fails and that RXO’s technology story is not unique: every survivor is “digital” now. RXO’s genuine differentiators are the Last Mile big-and-bulky franchise (~15% share, no major broker peer has one) and the managed-transportation-to-brokerage funnel; its genuine deficits are profitability at trough and truckload share losses to TQL and Robinson.

History and evolution

• 2006 — Jeff and Marianne Silver found Coyote Logistics in Chicago.
• 2011-2012 — Jacobs builds XPO via roll-up; Wilkerson joins to build the Charlotte brokerage hub.
• 2015 — UPS buys Coyote for $1.8B.
• August 2021 — XPO spins off GXO, previewing the breakup playbook.
• November 1, 2022 — RXO begins trading (1:1 distribution; record date Oct 20); 4th-largest US truckload broker; Wilkerson CEO, Jacobs chairman.
• 2023 — Freight recession deepens; RXO posts double-digit brokerage volume growth all year but FY net income of only $4M; Convoy collapses in October.
• June 23, 2024 — Agrees to buy Coyote from UPS for $1.025B (Coyote 2023: $3.2B revenue, $86M adj. EBITDA); initial synergy estimate just $25M.
• August-September 2024 — Raises ~$1.05B of equity (MFN ~$300M, Orbis ~$250M, ~$500M public offering); closes Coyote September 16; becomes #3 in North American brokered transportation.
• 2025 — Integration year: ERP consolidation (Q2), tech integration substantially complete (Q3), repeated layoff rounds; FY2024 net loss of $290M reported February 2025; stock falls ~55% during 2025 as the freight recovery keeps not arriving; Wilkerson named chairman (May).
• February 2026 — Q4 2025 reported: adj. EBITDA $17M vs $42M prior year; TL volume -12%, LTL +31%; brokerage late-stage pipeline +50% YoY.
• May 2026 — Q1 2026: adj. EBITDA $6M; Coyote coverage operations fully migrated to RXO Connect; cash synergy target raised above $70M; Q2 guided to $27-37M; stock rallies into July on freight-tightening data.

What people say

The case for. Sell-side sentiment turned constructive at the bottom: Morgan Stanley moved to Overweight ($19 target, early 2026) calling the ~55% selloff a valuation opportunity; Wolfe upgraded after the decline; Truist kept a Buy while trimming to $18 (January 2026). The bull thesis is operating leverage — a business that earned ~$283M of adjusted EBITDA on a smaller 2022 revenue base should out-earn that post-Coyote in a normal market — with raised synergy guidance (>$70M, May 2026), 50%+ pipeline growth, and the unified Connect platform as proof the downturn was spent building. Carriers praise the practical stuff: same-day QuickPay, the self-serve Connect load board, the RXO Extra rewards program, and Triumph-powered factoring (2023-2025 announcements). Customer wins are real — $200M+ of managed-transportation freight awarded in Q4 2025 alone.

The complaints. Carriers on TruckersReport accuse RXO of lowballing even in hot markets — one detailed account describes a $250/day layover dispute and a $1.27/mile all-in offer for extra re-delivery miles — and Trustpilot reviews of its consumer-facing last-mile deliveries skew harshly negative on scheduling failures and damage. Glassdoor rates RXO 3.2/5 across ~540 reviews, with the dominant post-Coyote theme being perpetual layoffs — “every other week there’s a layoff” — and tribal friction in both directions: legacy RXO staff describing loyal teams dropped for Coyote hires, Coyote staff describing RXO teams refusing to train them. The financial bear case is blunter: adjusted EBITDA of $6M in Q1 2026 rounds to zero on $1.4B of revenue; gross margin has compressed for years (16.0% to 14.2% year over year in Q1 2026); Coyote’s book kept shrinking under UPS and truckload volume kept falling under RXO (-11-12% in H2 2025); Simply Wall St-style narratives flag credit concerns restraining the stock; and analysts’ mean target sat below the market price ($15.50 vs $17.05) as recently as early 2026. The longest-dated worry is disintermediation: if AI agents let shippers price and procure trucks directly — or simply let every broker quote instantly — the industry’s take rate, not just RXO’s share of it, compresses. Convoy’s ghost cuts both ways here.

Outlook: well positioned or at risk?

At-risk. The honest reading of RXO’s first three and a half public years is that scale, technology, and good management have not yet produced a defensible economic position. The company executed nearly everything it promised — spun cleanly, took brokerage volume share through 2023, bought Coyote at a 43% discount to UPS’s 2015 price with equity rather than leverage, integrated it onto one platform ahead of schedule, and nearly tripled its synergy target — and still earned $6M of adjusted EBITDA in Q1 2026, a ~96% decline from its 2022 run-rate profitability. That is not an execution failure; it is a business-model disclosure. Brokerage spreads are set by an open market on both sides, C.H. Robinson remained comfortably profitable through the same trough at twice RXO’s brokerage scale, and TQL grew straight through it. RXO’s differentiated assets — the big-and-bulky last-mile franchise and the managed-transportation funnel — are real but small relative to the truckload engine that drives the P&L.

The bull case deserves its due: freight cycles turn, and RXO’s operating leverage into one is enormous — Q2 2026 guidance of $27-37M (versus $6M) with high-single-digit contract-rate increases suggests the coiled spring is real, and an equity-funded balance sheet means it reaches the recovery intact. But a cyclical recovery is a trade, not a moat. The structural questions all point the wrong way: truckload volume is being lost to hungrier competitors, gross margin has trended down for three years, the carrier and shipper bases face no switching costs, and AI is more plausibly a take-rate compressor for the whole industry than a differentiator for any one broker — Convoy already proved software alone doesn’t hold. RXO is a well-run company in a structurally hard seat. Until a full cycle shows it can earn returns that C.H. Robinson can’t match and TQL can’t undercut, the position is exposed — to the cycle it doesn’t control, and to the disintermediation everyone in the industry can see coming.

How a challenger would attack it

Attack the spread while RXO is pinned at breakeven. RXO earned $6M of adjusted EBITDA on $1.4B of Q1 2026 revenue — there is no cushion to defend price with — so a challenger with a lower cost base can underbid contract freight for two years and RXO cannot follow without printing losses that spook an investment-grade rating it protected by paying for Coyote in equity. The modern version of that attacker is an AI-native brokerage running quoting, carrier sourcing, track-and-trace and appointment-setting with a fraction of RXO’s ~6,900 heads: Connect digitized 90% of load handling, but RXO still carries the org chart of a phone-era broker mid-way through its third layoff cycle, with Glassdoor describing tribal RXO-versus-Coyote friction that a clean-sheet team simply doesn’t have. The carrier side is equally soft — TruckersReport threads document lowball rates and disputed layover pay, and carriers have zero switching costs — so a challenger that pays fast for free (RXO charges for QuickPay) and prices transparently pulls capacity first, which in a tightening market is the whole game. Finally, TQL’s rise proves the unfashionable vector still works: a commission-hungry sales culture took truckload share straight through the recession while RXO’s TL volumes fell 11-12%. Attack with either better software or hungrier salespeople; RXO is currently mid-pack at both.

Same playbook, new buyer

Take the funnel model to freight nobody brokers well. RXO’s real innovation is the funnel — managed transportation wins the relationship, brokerage monetizes the loads — and its most defensible asset is Last Mile’s big-and-bulky network (~15% of furniture/appliance delivery). The promising shift is applying that funnel to verticals the truckload giants ignore: healthcare and medical equipment logistics, construction materials to job sites, and white-glove installation-inclusive delivery for the trades — flows where service complexity, not spread arbitrage, sets the price, and where C.H. Robinson’s and TQL’s commodity-TL machines don’t reach. RXO can’t pivot there; its P&L lives and dies on the truckload engine and its capital is committed to digesting Coyote. Second shift: mid-market shippers as the managed-transportation buyer. RXO’s $200M-per-quarter freight-under-management wins are enterprise deals; a self-serve, AI-run managed-trans product priced for $5-50M-freight-spend shippers reaches a segment no incumbent staffs profitably. Third: cross-border Mexico, where nearshoring is moving exactly the freight RXO brokers domestically, and where none of the top-three US brokers owns the carrier network — building one requires local presence a cost-cutting integration-year RXO won’t fund.

Sources and further reading

• XPO Completes Spin-Off of RXO — XPO, November 2022. Spin terms: 1:1 distribution, October 20 record date, leadership structure.
• XPO Logistics Announces Drew Wilkerson as CEO for Spin-Off — RXO, 2022. Wilkerson’s C.H. Robinson and XPO career arc.
• RXO To Acquire Coyote Logistics From UPS — RXO, June 2024. $1.025B price; Coyote’s 2023 revenue, gross margin, and EBITDA; UPS contract through January 2030.
• RXO gets support from S&P after 2 big stock sales to fund Coyote acquisition — FreightWaves, September 2024. MFN/Orbis ~$550M plus ~$500M public offering; fully equity-funded structure.
• RXO Announces Fourth-Quarter Results — RXO/Business Wire, February 2026. Q4 2025: $1.5B revenue, $17M adj. EBITDA, TL volume -12%, LTL +31%, pipeline +50%.
• RXO Announces First-Quarter Results and Second-Quarter Outlook — Business Wire, May 2026. Q1 2026: $1.425B revenue, $6M adj. EBITDA, 14.2% gross margin, 33% spot mix, Coyote migration complete, >$70M synergies, Q2 guide $27-37M.
• RXO Q1 2026 slides: profitability pressures ease as pricing power returns — Investing.com, May 2026. Brokerage gross margin 11.4%; contract-rate outlook.
• A&A’s Top 10 Freight Brokerages and the State of the Industry in 2025 — FreightCaviar/Armstrong & Associates, 2026. C.H. Robinson $11.56B, TQL $7.36B, Arrive’s rise.
• United States Freight Brokerage Market — Mordor Intelligence, 2025. ~$19.5B 2025 market, 8.35% CAGR to 2030, digital-brokerage growth rates.
• Convoy’s Collapse: What Went Wrong with Digital Freight’s Biggest Bet — The Logistics Navigators, 2024. $900M raised, $3.8B peak valuation, October 2023 shutdown; Uber Freight and Transfix losses.
• RXO Reviews — Glassdoor, 2025-2026. 3.2/5 across ~540 reviews; layoff and Coyote-integration themes.
• RXO — TruckersReport forum threads — TruckersReport, 2023-2025. Carrier complaints on rates and layover pay.