FedEx is conducting a strategic analysis of the company’s less-than-truckload segment and its relative value to the company, suggesting that FedEx Freight could be sold or spun off so the company can focus on its parcel and logistics business.
“With the recent completion of the FY 2025 planning process, we have turned our focus to the next phase of our long-term stockholder value creation plans. As a part of this work, our management team and the board of directors, along with outside advisers, are conducting an assessment of the role of FedEx Freight in our portfolio structure and potential steps to further unlock sustainable shareholder value,” CEO and President Raj Subramaniam said Tuesday on a call with analysts following the announcement of fourth-quarter results. “We’re committed to completing this review thoroughly and deliberately by the end of the calendar year.”
FedEx Freight is the corporation’s (NYSE: FDX) best-performing segment, with operating margins of 20% each of the past two years compared with margins of 11.8% for Ground and 2% for Express in 2023. During the fourth quarter, operating income increased by $58 million, as focus on revenue quality and cost management overcame the soft demand environment and drove higher yields.
FedEx Freight is the largest LTL carrier in the nation and is extremely efficient, with an operating ratio of 80% – second only to Old Dominion Freight Line (ODFL).
Satish Jindel, the founder and president of parcel transport consultancy ShipMatrix Inc., predicted in an interview that FedEx will spin off the Freight subsidiary.
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