FedEx Freight sees flat growth ahead of 2026 spinoff as LTL market stays sluggish
Key takeaways
- FedEx Freight expects flat to modest revenue growth through its planned mid-2025 spinoff amid weak demand and excess capacity.
- LTL operating margins fell to 16% as shipments remain steady, reflecting tight capacity and a rational but sluggish market.
- FedEx Freight's split from its parent company is on track to be completed next June.
FedEx Corp.’s less-than-truckload division will grow only slightly, if at all, between now and its spinoff into a stand-alone company in the middle of next year, executives said Sept. 18.
In the three months that ended Aug. 31, FedEx Freight booked an operating profit of $360 million on sales of nearly $2.26 billion. Those numbers were down from $439 million and $2.33 billion, respectively, in the same period a year ago. The division’s operating margin fell to 16.0% from 18.8% a year earlier—and it’s unlikely to get a lift soon, thanks to rising demand.
“We expect revenue to be flat to up modestly year over year, depending largely on the market conditions in the second half of the year,” Chief Customer Officer Brie Carrere told analysts on a conference call to discuss FedEx’s fiscal first-quarter results.
The main factors behind a sluggish top-line environment are well known by now: The combination of weak industrial activity and excess trucking capacity means FedEx—No. 1 on the 2025 FleetOwner 500 list of for-hire carriers—and its peers have little opportunity to grow profitably.
At 925 lb. and $374.62, respectively, FedEx Freight’s weight per shipment and revenue per shipment over the past three months were up only marginally from their averages of the previous year. The company averaged 90,012 total shipments per day during the quarter, down a tick from its fiscal 2025 average.
Executives did have a few positive FedEx Freight items to report, along with FedEx’s overall earnings of $824 million on more than $22.2 billion in sales. FedEx President and CEO Raj Subramaniam said the LTL market “remains rational” even as most of its players continue to struggle to grow profitably.
CFO John Dietrich, meanwhile, said the process of separating FedEx Freight from its parent company—announced in late 2024 and on track to be completed next June—is progressing as planned. His team recently filed papers with the U.S. Securities and Exchange Commission and the Internal Revenue Service to keep things moving forward.
In addition, Dietrich said the LTL group now has a dedicated sales and sales support force of about 200 people, half the number executives want it to be by late spring.
“I’m confident that both the expanded dedicated sales force and our ramping technology investment will continue to improve the customer experience,” Dietrich said on the conference call.
Shares of FedEx (Ticker: FDX) climbed more than 5% to nearly $239 in after-hours trading September 18. Over the past six months, they are still down slightly, leaving the company’s market capitalization at about $53 billion.
About the Author
Geert De Lombaerde
Senior Editor
A native of Belgium, Geert De Lombaerde has more than two decades of experience in business journalism. Since 2021, he has written about markets and economic trends for Endeavor Business Media publications FleetOwner, Healthcare Innovation, IndustryWeek, Oil & Gas Journal, and T&D World.
With a degree in journalism from the University of Missouri, he began his reporting career at the Business Courier in Cincinnati. He later was managing editor and editor of the Nashville Business Journal. Most recently, he oversaw the online and print products of the Nashville Post and reported primarily on Middle Tennessee’s finance sector and many of its publicly traded companies.