Unfettered FedEx Freight Debuts as Stand-Alone Business

From left: Mike Lyons, Marshall Witt, John Smith and R. Brad Martin of FedEx Freight ring the bell at the NYSE on June 1. (FedEx Freight)

FedEx Freight launched as a stand-alone business June 1 unfettered by pain points hampering its less-than-truckload ambitions as the wider freight market rebounds, CEO John Smith told Transport Topics.

Smith, who rang the bell at the New York Stock Exchange on June 1 as the carrier made its trading debut after being spun off by FedEx Corp., said the potential of Memphis, Tenn.-based FedEx Freight would only now be truly unleashed.

“We feel that our network is differentiated. We’re the largest and we’re the fastest,” he said, noting that the company also has both priority and economy offerings.

FedEx Freight already ranks No. 1 among LTL carriers on TT’s list of the largest players in the freight segment.

But the carrier is keen to target segments of the LTL marketplace historically felt to be underpenetrated relative to its lofty position in the standings and unreflective of its resources, which in many cases dwarf those of its peers.

Currently, the company has 365 locations, around 26,000 service center doors and about 30,000 vehicles, including 17,000 trailers.

The NYSE welcomes @FedEx Freight to celebrate its listing! $FDXF https://t.co/6JvlmENc5f — NYSE 🏛 (@NYSE) June 1, 2026

“When we first thought about it and the board approached us on [the spinoff], when you think about it from a total enterprise perspective, at first to me and a lot of us, it didn’t make sense,” said Smith.

That was in the summer of 2024. However, a study carried out by a third-party consultant changed that.

“What really intrigued us after the study was done [was] the value that this created as well as the opportunity to really unleash FedEx Freight’s potential,” the carrier’s top executive told TT in an exclusive interview ahead of the stock’s debut.

Smith and his fellow executives laid out the pillars of that plan of attack during the carrier’s first investor day April 8.

FedEx Freight aims to improve its market share in the small- to medium-size business, grocery, healthcare, and data center and energy segments.

The carrier has only minimal penetration in the $9 billion small- to medium-size business sector of the LTL market, Chief Specialized Services and Commercial Officer Mike Lyons told analysts and investors, with a significant percentage of its revenue coming from large corporate customers.

“Basically, we’re doing zero business in the food and beverage marketplace,” Smith told TT in late May. “We feel like that that’s one of the markets that does good, whether the market is good or the market is down due to the fact that people are going to eat and people are going to drink.”

The executive said FedEx Freight would focus on dry goods in the food and beverage segment of the market as it required no short-term investment in real estate or rolling stock on top of what the fleet owner already has.

Refrigerated goods, if FedEx Freight were eventually to look into that part of the food and beverage sector, would be the purview of the Custom Critical unit within the company.

The transfer of FedEx’s Custom Critical operations to FedEx Freight around 18 months ago is however set to drive an increase in healthcare revenue, Smith said in April.

Smith told analysts that FedEx Freight would have revenue of $8.7 billion and an operating margin of 12% in fiscal 2026, but the company expects compound annual revenue growth of 4%-6% in the medium term.

Revenue growth is set to be driven by a stand-alone sales team and technology tailored to FedEx Freight’s needs.

The carrier added around 1,500-1,700 employees across the business ahead of the IPO, including 500 sales representatives. Most of the new employees were back-office specialists.

FedEx Freight entered the LTL space in 1998 with the acquisition of Viking Freight, expanded its regional network in 2001 with the purchase of American Freightways and added longhaul capability in 2006 by taking over Watkins Motor Lines.

Merger of the various segments — with a corporate level back office; be that sales, legal, accounting or finance — was completed by 2011 after they were initially run separately, which led to one of the biggest challenges ahead of the spinoff, according to Smith.

“What was the most difficult thing for us to do to get ready for the spin is … we had to build the back office back out. And that’s what we’ve been doing over the last year is building those functions out so that we could be a stand-alone independent company,” he told TT.

FedEx Freight plans to employ a new customer relationship management system to pursue its goals for gaining market share.

“We haven’t spent a lot of money or capital on technology and some of the pain points that we have had that were customer facing. We did not have the technology that we need to make the small and medium customer experience like it should,” Smith said during the interview.

“The new tool addresses a lot of the pain points that we had with our customers, but it also has built technology that is fit for LTL. And what I mean by that is that the LTL customer is different from the parcel market,” he said.

“When you think about a $90 billion company and the LTL piece is about $9 billion of that, we had more opportunity and the bigger focus from a technology build was on the parcel business. That’s what we’re flipping now as we become an independent company,” he added.

As a stand-alone entity, FedEx Freight also stands to benefit from a freight market that is turning to the upside, although Smith said he does not expect the recovery to happen in a straight line.

FedEx Freight’s common stock was listed on the New York Stock Exchange under the ticker FDXF. The company raised $3.7 billion in its debut investment-grade dollar bond sale in late January, with the proceeds to be paid to FedEx as part of the consideration for the separation.