FedEx Freight Begins Trading as Independent Company After Spin-Off From Parent

FedEx Freight began trading as an independent company on Monday after being spun off from FedEx. The separation gives the business control over its own capital allocation for the first time. John Smith, CEO of FedEx Freight, said the split will let the company invest more aggressively in growth initiatives and compete more effectively in the less-than-truckload shipping market.

"The things that we are going to be able to control now, especially from a capital and investment perspective, be able to put dollars into the LTL company that are LTL specific," Smith said. FedEx Freight is the largest less-than-truckload carrier in North America.

The LTL market combines shipments from multiple customers onto the same truck, allowing businesses to move freight more efficiently than paying for an entire trailer.

Competitors include Old Dominion Freight Line, ArcBest, and XPO. While operating inside FedEx, the freight unit generated roughly $9 billion in revenue compared with the parent company's $90 billion. Smith said the business often took a backseat inside the larger transportation company.

As a standalone entity, FedEx Freight plans to invest heavily in customer-facing technology, expand its dedicated sales force, and improve profitability. "All those things are going to level the playing field and also allow us to leapfrog, we've been working on those very hard for the year," Smith said.

The company has set a target of reaching a 15% operating margin by 2029, up from roughly 12% today.

Smith said the goal is not a ceiling. Smith expressed confidence that FedEx Freight can grow even if the economy weakens, citing opportunities to gain market share and improve margins at the same time. "With our strategy, we feel like that we can grow in a down economy.

That's why we feel good about our short, medium, and long-term strategy," he said.