FedEx Set to Unleash New Era with Full Separation of FedEx Freight
FedEx Corporation has announced a significant move in its transformation journey, as the company gears up to separate its FedEx Freight business into two industry-leading public companies. This strategic decision was revealed during the company's recent Q2 earnings call, and is set to unlock substantial value for stockholders while allowing for continued commercial, operational, and technological cooperation between both businesses.
According to Raj Subramaniam, President and CEO of FedEx, this separation will enable both companies to benefit from enhanced focus and competitiveness. For FedEx, the move will ensure strong execution of its near- and longer-term strategic priorities while preserving the benefits that Freight enjoys from their long-standing connectivity.
The newly created LTL pure-play, FedEx Freight, is set to become the largest carrier by revenue with the broadest network and fastest transit times. The company has maintained a leading market share position for an extended period, increasing operating profit nearly 25% on average per year over the last five years, while expanding operating margin by approximately 1100 basis points.
The team's focus on safety, facility utilization, revenue quality, and operational efficiency has driven this performance. Areas where FedEx Freight sees the greatest opportunity for growth include an expanded dedicated LTL sales force, enhanced LTL-specific pricing and invoicing system, improved network efficiencies, and LTL-focused automation.
As a separate company, FedEx Freight will be better positioned to unlock its full value potential. Lance Moll will continue to serve as President of FedEx Freight as the company executes on its separation. The long-standing cooperation between FedEx and FedEx Freight will continue through commercial, operational, and data and technology agreements to enable seamless continuity of service and capture existing benefits from the relationship.
With this move, FedEx is poised to unleash a new era in its transformation journey, unlocking value for stockholders while allowing for continued growth and competitiveness. As the company continues to execute on its strategic priorities, investors can expect exciting developments in the LTL industry.
