stockrowWhat it does
FedEx Freight is a North American less-than-truckload, or LTL, freight transportation provider headquartered in Memphis, Tennessee. LTL means it combines shipments from multiple customers in the same trailer rather than dedicating a whole trailer to one shipper. It picks up freight locally, moves it through service centers and linehaul routes, and delivers it to the recipient.
Its core services are FedEx Freight Priority and FedEx Freight Economy. Priority is for customers that need time-definite transport: it offers next-business-day service for shipments travelling up to 600 miles and second-business-day service for shipments travelling up to 1,600 miles. Economy is for shipments with more flexible delivery requirements. Both services use one integrated network.
The company also provides expedited and time-specific freight through FedEx Custom Critical, including Surface Expedite and White Glove Services. FedEx Freight Direct adds residential and commercial delivery options, including inside delivery and packaging removal, while Retail Flex serves large retailers. Customers can quote, book, track and manage domestic and cross-border shipments through digital platforms including LTL Select.
As of June 1, 2026, the network included over 365 locations, approximately 355 shipping terminals and approximately 10 linehaul relay sites. It operated across all 50 U.S. states, Canada and Mexico, and served Puerto Rico and the U.S. Virgin Islands.
How it makes money
FedEx Freight has one reportable segment: LTL freight transportation. It earns revenue when customers buy transportation and related delivery services. Its service mix includes premium Priority freight, value-oriented Economy freight, volume services with customized pricing for qualifying non-urgent shipments, Custom Critical services, Freight Direct and Retail Flex.
Priority generated $5.6 billion in FY2026, or 63.2% of revenue, while Economy generated $2.8 billion, or 32.1%. Other revenue was $408.0 million, or 4.64%. Priority revenue was −0.43% year over year, Economy revenue was −2.21%, and other revenue was −2.16%.
LTL transportation is generally priced by freight weight, commodity and distance. Freight class also affects price: light, bulky shipments generally carry a higher class and price than dense, heavy freight. Fuel surcharges, accessorial charges and revenue adjustments are included in revenue. The company tracks revenue per hundredweight, revenue per shipment, shipment weight and average daily shipments. Revenue per hundredweight is influenced by fuel surcharges and weight per shipment, so it does not necessarily show an underlying change in base rates.
The latest annual product figures are $5.6 billion for Priority, $2.8 billion for Economy and $408.0 million for other revenue in FY2026. The available quarterly figure is $205.0 million of separation operating expenses in Q4 FY2026, rather than a quarterly revenue total.
Volumes, service mix, pricing, fuel-price changes and the recovery of fuel costs through surcharges affect revenue and operating results. The business is cyclical: spring and fall are typically the busiest periods, while late December through February is typically the slowest.
| Product or service | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| Priority | $5.6 billion | 63.2% | −0.43% |
| Economy | $2.8 billion | 32.1% | −2.21% |
| Other | $408.0 million | 4.64% | −2.16% |
Customers and how it sells
FedEx Freight serves approximately 108,000 active customers, ranging from large national companies to regional businesses and small and medium-sized businesses. Its services support customers across industries and specialties, including e-commerce, advanced manufacturing, healthcare logistics, grocery, data centers and energy.
Customer concentration is limited in the disclosed figures. The top five customers accounted for 9% of 2026 revenue, the top 25 accounted for 21%, and the largest customer accounted for approximately 4%. The company sells through a dedicated LTL sales organization and through digital customer platforms. LTL Select is a cloud-based, multi-carrier transportation management system through which customers can process domestic and cross-border LTL shipments.
The United States generated $8.6 billion of FY2026 revenue, or 97.2% of revenue. International revenue was $243.0 million, or 2.76%. The company provides broad coverage in the United States, Canada and Mexico. It offers service to and from Puerto Rico and to the U.S. Virgin Islands through alliances, and its cross-border capabilities cover Canada and Mexico. Partnerships for less-than-container-load shipments in Europe and Asia support international logistics.
| Region | Revenue, FY2026 | Share | Change on the year |
|---|---|---|---|
| U.S. | $8.6 billion | 97.2% | −1.08% |
| International | $243.0 million | 2.76% | −1.62% |
Suppliers and costs
FedEx Freight operates an asset-based network requiring vehicles and trailers, service centers, ground-support and dock equipment, technology, labor and fuel. It had approximately 40,000 employees and nearly 30,000 motorized vehicles as of June 1, 2026. The company does not identify key or sole-source suppliers in the available information.
Fuel is a significant day-to-day input. Fuel prices and supply disruptions can affect costs, and the company’s ability to recover incremental fuel costs through fuel surcharges affects results. Operating expenses also include employee-related costs, shared services and general corporate costs, finance charges for factored trade receivables, self-insurance claims, professional fees and outside service contracts.
Operations are capital intensive because they require continuing investment in vehicles, trailers, facilities, dock equipment and technology. Capital expenditures were 13% lower in 2026, primarily because of lower spending on vehicles, trailers, ground-support and dock equipment, partly offset by higher spending on facilities and information technology. The company incurred $492 million of Spin-Off costs in 2026. It also plans capital expenditures of $320 million to $340 million for the remainder of calendar year 2026.
- Revenue$8.8B
- Cost of revenue−$1.3B
- Selling, general and administrative−$4.6B
- Other operating costs−$2.3B
- Operating income$540.0M
Competitive position
FedEx Freight competes for LTL shipments with local, regional and national LTL carriers, including publicly listed national-scale carriers and smaller national and regional carriers. It also competes with truckload carriers, small-package carriers, private fleets, final-mile and expedited delivery providers, railroads, air-freight carriers, third-party logistics providers and digital freight platforms. Some competitors have larger customer bases, greater resources or longer operating histories in particular markets. No individual competitor is named in the available information.
The company identifies its network, integrated service offerings and technology as differentiators. Its LTL network had more than 26,000 service-center doors and coverage across 98% of U.S. ZIP Codes, excluding military and PO ZIP Codes, as of June 1, 2026. The network supports cross-docking, where freight is transferred between trucks at terminals, and allows consolidation of multiple customers’ shipments. Priority and Economy provide differing speed-and-price options on the same network. Digital tools provide quoting, booking, tracking, visibility, reporting and analytics.
Our reading: Network density is a meaningful moat because an LTL carrier needs local pickup and delivery capacity, terminals and scheduled linehaul routes to consolidate shipments efficiently. [item1]
Our reading: The dual-service model and shipment-management technology strengthen service differentiation, but the company faces many transportation alternatives and competitors with greater resources in some markets. [item1]
Growth opportunities
FedEx Freight is pursuing growth by expanding its LTL customer base, adding business in selected verticals and improving its commercial and digital capabilities. Its areas of focus include small and medium-sized businesses, healthcare, grocery, data centers and energy. Related initiatives include expanding field sales for small-business growth, seeking preferred-carrier status in grocery, and using FedEx Custom Critical for healthcare product solutions.
The company offers volume services intended to capture qualifying non-urgent demand from customers that prioritize cost efficiency, including bulk retail and industrial components. It is also streamlining online tools, improving customer-support channels, reducing cargo claims and offering more flexible service options. Its technology work includes dock software, real-time tracking, route optimization, load planning, RFID tracking, demand forecasting and capacity planning.
Network and capacity investment are part of the plan. The company expects capital expenditures of $320 million to $340 million for the remainder of calendar year 2026, including technology investments required to exit the Transition Services Agreement. It expects to replace transitional FedEx services with internal or third-party services over time, generally no later than 24 months after the Spin-Off. The company also identifies e-commerce, demand for outsourced logistics and shippers’ adoption of digital tools as industry trends relevant to its operations.
- $9.4BFY2023
- $9.1BFY2024
- $8.8BFY2025
- $8.8BFY2026
Structural risks
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Demand and pricing risk: Macroeconomic conditions, inflation, interest rates, supply-chain disruptions, geopolitical conflicts, trade-policy changes, customer demand and shifts in inventory and distribution patterns can affect demand for freight services.
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Fuel and operating-cost risk: Fuel-price movements and supply disruptions may raise costs, while fuel surcharges may not fully recover those increases. The business also depends on the availability and cost of drivers and other personnel.
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Separation risk: The company previously relied on FedEx for corporate functions and will use certain FedEx services during a transition period. Moving to internal or third-party systems may require significant resources and create additional stand-alone costs.
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Regulatory and labor risk: Transportation, environmental, safety, labor, tax, data-privacy and other rules can increase compliance costs. Labor disruptions, changes in labor laws, potential unionization and driver-hours requirements can disrupt operations.
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Technology and resilience risk: Failure to implement new technology, technology disruption or a data breach could impair operations or competitive position. Severe weather, natural disasters, public-health crises and other disruptions can affect volumes, costs and service.
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Financing and Spin-Off risk: Debt requires interest payments, may limit financial flexibility and can increase vulnerability to adverse economic conditions. The company may not achieve all anticipated benefits of the Spin-Off.
Bottom line
Our reading
Our reading: FedEx Freight is an asset-intensive North American LTL carrier whose operations depend on consolidating many customers’ shipments across a large terminal, vehicle and linehaul network. Its core commercial model combines premium time-definite and economy services, while most revenue is generated in the United States. [item1; item7]
Our reading: The network, customer diversification and dual-service offering support the business model, but freight demand, fuel and labor costs, regulation, technology resilience and the transition to stand-alone systems remain material operating considerations. [item1; item1a; item7]