The board of FedEx has agreed to separate FedEx and FedEx Freight with the reasoning that “separation unlocks significant value”.
FedEx Corporation confirmed the decision in its fiscal second quarter 2025 results documents, released on December 19. The aim is to grow FedEx Freight’s position in the Less than truckload (LTL) market.
The company said: “FedEx and FedEx Freight will benefit from enhanced focus and competitiveness.” However, it added that it planned to “continue to enable commercial, operational and technological cooperation”.
Elsewhere, FedEx has redesigned its Tricolor global air network. “Our international air network design strategy is improving density and asset utilization across the enterprise,” said the company.
The company also aims to enable $4bn in structural cost savings by the end of financial year 25 through its DRIVE programme, and is targeting $2bn in cost savings by the end of financial year 2027 through optimisation and efficiency with its Network 2.0 multi-year initiative to improve how packages are picked up, transported and delivered.
Revenue for FedEx Express in the second quarter was flat on the second quarter of financial year 2025, at $18.8bn for both periods.
“Improved base yields and increased demand for international export parcel supported results, offset by lower U.S. domestic parcel and freight volume,” said FedEx.
The company added: “U.S. manufacturing PMI has indicated a contraction 24 of the last 25 months, reflecting soft B2B demand environment.”
Operating income was up 13% for the segment, driven by cost savings, base yield improvement and export demand. Inflationary pressures, United States Postal Service contract expiration, and Cyber Week timing shift were partial offsets.
FedEx Freight fared worse with an 11% revenue drop to $2.2bn. FedEx noted that the “Decrease (was) driven by lower average daily shipments, fuel surcharges, and weight per shipment. YoY revenue comparison (was) challenged by last year’s Yellow volume acquisition.”
Operating income for the segment was down 36%.
FedEx saw revenues and profits decline in its fiscal first quarter as the company faced challenging market conditions, customers opted for less expensive delivery services and operating costs were on the rise.
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