News / FedEx prepares Freight spin-off as LTL market softens

© Charles Mcclintock Wilson |

FedEx has moved closer to separating its less-than-truckload business, confirming that FedEx Freight will be spun off into a standalone, publicly listed company on 1 June as the group continues to reshape around profitability rather than scale for its own sake. 

Once complete, FedEx Freight will trade independently on the New York Stock Exchange under the ticker FDXF, with an investor day scheduled for April in New York to outline the business’s standalone strategy and financial model. 

Announcing the SEC filing on Friday, FedEx CEO Raj Subramaniam framed the move as a natural progression of the group’s transformation.

“Today’s Form 10 filing reflects the strong progress we are making toward the launch of FedEx Freight as a focused, industry-leading LTL company,” he said. “This separation will create two world-class companies, positioning both FedEx and FedEx Freight to better serve customers and unlock long-term value for all stockholders.” 

The timing of the spin-off is notable. The North American LTL market is currently soft, with volumes under pressure, excess capacity lingering from the post-pandemic period, and labour costs continuing to rise.

FedEx Freight’s own performance reflects those conditions: in its most recent quarter, the unit reported fewer shipments and sharply weaker operating income, even before accounting for one-off spin-off costs. Management has been explicit that softness in industrial demand and surplus LTL capacity are expected to continue weighing on the business in the near term. 

That context helps explain why FedEx is pressing ahead with separation now, rather than waiting for a stronger freight cycle.

As part of the wider FedEx group, Freight’s cyclical swings increasingly clash with a corporate narrative that is focused on yield improvement, network efficiency, and more predictable margins. As a standalone company, Freight can, instead, be valued as a pure-play LTL carrier, with investors fully aware of the volatility inherent in that market. 

John Smith, incoming president and CEO of the future FedEx Freight, described the business as “built on a strong foundation, powered by our expansive network, differentiated service model, and 39,000 highly skilled and dedicated team members”. He argued that independence would leave it “positioned to deliver greater value as the premier LTL freight carrier in North America”. 

FedEx’s approach has been less dramatic than UPS’s headline-grabbing cuts, but the underlying logic is strikingly similar. Through its Network 2.0 programme, FedEx has been integrating Express and Ground operations, rationalising facilities, grounding aircraft, and stripping out structural cost. The Freight spin-off can be seen as an extension of that philosophy: separating two fundamentally different economic models rather than forcing them to coexist under one corporate roof. 

That strategy is underpinned by FedEx’s latest financial results, which show how it has benefited from yield discipline and cost reduction. For the second quarter ended 30 November, FedEx reported revenue of $23.5bn, up from $22bn a year earlier, while operating income rose sharply, year on year. Adjusted diluted earnings per share climbed to $4.82, compared with $4.05 in the prior-year period. 

The improvement was driven largely by higher US domestic and international priority package yields, continued structural cost savings, and increased domestic parcel volumes.  

“FedEx delivered an outstanding second quarter as we successfully executed our growth strategy and advanced our network transformation, while navigating a highly challenging external environment,” said Mr Subramaniam. 

By contrast, FedEx Freight’s operating income declined during the quarter, reflecting fewer shipments, higher wages and $152m of one-time spin-off costs.

The divergence between the parcel and freight businesses was stark, reinforcing the strategic logic behind separation. 

FedEx has also raised its full-year fiscal 2026 revenue and earnings outlook, signalling confidence that its transformation is gaining traction. CFO John Dietrich said the revised guidance reflected “the momentum that is building in our business as we continue to drive stockholder value within a challenging operating environment”, adding that “the progress we are making on our strategic initiatives is tangible”.