The future of FedEx Freight, the less-than-truckload (LTL) segment of FedEx Corporation, is shrouded in uncertainty. The company is currently undergoing a strategic review that could potentially lead to a sale or spinoff of this subsidiary.
This move is likely motivated by FedEx Freight’s contrasting performance compared to other FedEx sectors. While FedEx Freight boasts healthy operating margins of 20% over the past two years, FedEx Ground and FedEx Express have seen margins of 11.8% and 2% respectively in 2023. Despite facing a soft demand environment, FedEx Freight managed to increase its operating income through a focus on revenue quality and cost management.
Industry experts predict that a spinoff is the more likely scenario. This would allow FedEx to maximize shareholder value by creating an independent company for FedEx Freight. The article suggests that separating the LTL segment could allow FedEx to sharpen its focus on its core parcel and logistics business.
Source: Logistics Insider