FedEx officially completed its spinoff of FedEx Freight Monday, putting the newly standalone trucking company to its biggest test yet as it exits the cover of the logistics giant.
The less-than-truckload (LTL) company stumbled out of the gate in its public market debut on the New York Stock Exchange, seeing its stock decline more than 9 percent after opening the day at more than $165 per share.
As an independent business, FedEx Freight is the LTL market leader in annual revenue, surpassing chief rivals including Old Dominion Freight Line (ODFL), Estes Express Lines and XPO. But analysts are convinced the firm must do more to justify its roughly $22 billion valuation.
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J.P. Morgan’s Brian Ossenbeck said in a note Monday he values FedEx Freight at a lower multiple compared to these competitors, citing “given execution risk and transition costs related to the spin as well as persistent underperformance on service and volume metrics.”
The industry at large aims to dig itself out of a nearly four-year malaise amid wider weakness in the industrial and manufacturing sectors. The LTL market size contracted from roughly $59 billion in 2022 to $51 billion in 2025, according to data from SJ Consulting.
Under this unfriendly environment that persisted until signs of a turnaround began to take shape in 2026, FedEx Freight’s revenues declined 11.8 percent from $10.1 billion in 2023 to $8.9 billion last year.
The unit’s operating margins contracted three full percentage points from 18.8 percent to 15.8 percent during that stretch as rates cratered amid a prolonged slowdown in volumes.
In a press release introducing the spinoff, John Smith, president and CEO of FedEx Freight, said the company’s “sharpened focus” would help it accelerate profitable growth.
“As the largest pure-play LTL carrier in North America, we will leverage our comprehensive network with more than 26,000 service center doors to deliver cost and service advantages to our customers and capitalize on growth opportunities in high-potential verticals,” said Smith in a statement. “With our safety above all culture and a world-class team, FedEx Freight is well positioned to unlock our full potential and deliver long-term stockholder value.”
The LTL has a lot to prove as it goes it alone, setting up ambitious long-term targets at its first investor day in April. The company expects to increase adjusted operating margins from a current 12 percent of revenue to roughly 15 percent in the “medium term,” a period which it did not define.
Additionally, the company is aiming to grow revenue at a pace of 4 percent to 6 percent, while expanding adjusted operating income by a larger 10 percent to 12 percent.
Chief financial officer Marshall Witt noted the 2026 transition and fleet modernization efforts would drive margin headwinds in the short term, but he said the medium-term expansion would “be done through maintaining a disciplined approach to pricing, optimizing productivity and reducing the overall cost to serve and support growth.”
“LTL-focused investments in capabilities, automation and technology will drive structural operating leverage over time,” Witt asserted.
At the event, company brass highlighted four target verticals representing a more than $9 billion revenue opportunity: small-and-medium-sized businesses, healthcare, grocery and data centers and energy. Chief specialized services and commercial officer Mike Lyons cited during the event that FedEx Freight has “very little penetration” across these verticals today, noting that they are largely underserved by LTL carriers.
The revenue opportunity would double FedEx Freight’s 2025 revenue of $8.9 billion.
FedEx Freight’s largest incumbent advantage to spurring this growth comes from its massive North American service network.
As of Feb. 28, the LTL operated nearly 30,000 motorized vehicles and over 365 locations, including approximately 355 shipping terminals (over 320 in the U.S.) and roughly 10 linehaul relay sites. These facilities range in size from approximately 2,000 to 280,000 square feet of office and dock space.
As part of the spinoff, FedEx distributed 80.1 percent of its outstanding shares to FedEx stockholders, proportional to how much FedEx stock they owned.
Each FedEx stockholder received one share of FedEx Freight common stock for every two shares of FedEx common stock held as of the close of business on May 15. Stockholders will receive cash instead of fractional shares of FedEx Freight stock.
FedEx retained 19.9 percent of the outstanding shares of FedEx Freight stock, but will dispose of the stake within 24 months. The company says it will divest the shares either as repayment to FedEx creditors or as dividends to shareholders.
