Shipping Co XPO Refinances $1B After Amazon Pulls Biz

A global shipping company is reeling after Amazon apparently pulled business to focus on its own logistics, according to a report from Bloomberg.

XPO Logistics, one of the world’s largest transportation and warehouse operation companies, is looking for a buyer for $1 billion worth of bonds to refinance its debt following the loss of its biggest customer, which Wall Street analysts say is Amazon.

The company is also dealing with decreased demand for its services in Europe.

XPO plans to use the bonds to pay back creditors through a credit agreement, and the 5.5-year securities aren’t allowed to be bought back for two and a half years.

The company also slashed its profit forecast earlier this month – for the second time in two months. Amazon has been working on growing its own logistics services, and analysts predict that it will rely less and less on third-party suppliers.

The fall of XPO Logistics has been rapid. It was once a top equity pick for 2019 by Morgan Stanley. The stock, however, was recently downgraded, and the company’s position “has raised questions on forward visibility.”

Amazon has had its own stock issues recently, especially because of uncertainty in India. Analysts said they were worried about the types of costs associated with new Indian regulations that would hamper the company’s ability to do business. The law prevents multinational eCommerce outfits from selling products through affiliated companies.

The repercussions affected Amazon’s outlook, and might have been a factor in the company’s soft guidance for Q1 in 2019. It has also been a factor in slow international growth for the company. Q1 revenues are expected to be between $56 billion and $60 billion, which is lower than the $60.8 billion estimated by analysts.

Amazon CFO Brian Olsavsky said India was a large concern. “There is much uncertainty as to what the impact of the government rule change is going to have on the eCommerce sector there,” he said. “Our main issue and our main concern is trying to minimize the impact to our customers and sellers in India.”