The leaders of FedEx Corp.’s less-than-truckload unit aren’t expecting a pop in volumes this spring after a winter quarter in which the market-leading carrier’s shipments per day fell nearly 6% from the prior year.
FedEx Freight, which will become an independent company June 1, produced an adjusted operating profit of $134 million in the three months that ended February 28. That was down from $261 million in the same period a year earlier and excluded about $126 million in spending related to the business’ pending separation from FedEx Corp., the No. 1 carrier on the FleetOwner 500 list of largest for-hire carriers.
Revenues during the quarter fell to $1.99 billion from $2.09 billion, and total shipments per day fell to about 80,200 from more than 85,000 in FedEx’s fiscal 2025. The leadership team, led by CEO John Smith and CFO Marshall Witt, isn’t counting on a bounce during FedEx Freight’s last quarter under the FedEx umbrella: “Continued industry demand weakness” means shipments will again be down around 5% versus a year ago, while revenues will be flat to down slightly.
“I do think it's a broader LTL market that we’re in and there’s nothing necessarily unique about our volumes and what we’re seeing,” Witt said on a March 19 conference call with analysts. “But with that said, we certainly recognize that we do and need to continue to improve our yield growth.”
FedEx executives have been highlighting their focus on profitability at FedEx Freight since announcing plans to spin out the business in late 2024. Elements of that plan include a heightened focus on selling to smaller businesses as well as a dedicated sales and support team numbering about 400 people.
Measured in terms of FedEx Freight’s revenue per shipment, those efforts have started to pay off: After four quarters of year-over-year drop, that metric turned positive last fall and was up 1.2% in FedEx’s most recent quarter.
“Margins retreated more than we’d expected on front-loaded spin costs [but] pricing remains rational, and we see runway for improvement post-separation,” Stifel analysts led by Bruce Chan wrote to clients.
Shares of FedEx (Ticker: FDX) were changing hands at around $361 on the afternoon of March 23. Over the past six months, they have climbed more than 50%, a move that has grown the company’s market capitalization to more than $85 billion.
