FedEx Freight to become separate company, largest LTL in US

FedEx will soon be splitting its freight division into a separate company to please stakeholders. 

FedEx Corp. announced its intent to separate its FedEx Freight unit into a separate company on December 19th after an assessment made by the company’s board of directors. The company says that the separation will maintain “operational synergies between both companies” while promoting “greater strategic, operational and financial execution for each company and its stakeholders.”

This split will make FedEx Freight the largest LTL carrier in the United States. 

“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” FedEx CEO Raj Subramaniam said. “This announcement is a testament to the strength of the business our team has built, and to our dedication to doing what’s best for our customers, our team members and our stockholders. Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders.”

The separation process has already begun and is expected to take 18 months. 

“The separation will allow for more customized operational execution along with more tailored investment and capital allocation strategies to serve the unique and evolving needs of both the global parcel and LTL markets,” FedEx said. “The [companies] will also maintain the strategic advantages of cooperation on key commercial, operational and technology initiatives.”

“The benefits of the existing FedEx and FedEx Freight relationships will be optimized through commercial agreements between the two entities to maintain operational and service-level continuity. Ongoing collaboration will be designed to improve the value propositions of both companies by accelerating speed, improving coverage and driving efficiencies that will lower the cost to serve.”

“Over the last 50 years, FedEx has built an unmatched global platform that has produced significant value for our stockholders and opportunities for our team members,” said R. Brad Martin, vice chairman of the board and chairman of the Audit and Finance Committee. “Building upon that powerful foundation, and following a careful assessment of our portfolio, the FedEx Corp. board is confident that a separation of FedEx Freight will drive continued growth and value creation.”

“FedEx Freight is expected to benefit from a strong balance sheet that will allow it to maintain and extend its leadership position in the LTL market,” the release said.