Dive Brief:
- FedEx Freight’s Q2 operating income collapsed from $312 million last year to $90 million for the quarter ending Nov. 30, according to an investor presentation.
- But one-time spin-off costs ate up $152 million, the company reported in the presentation and on an earnings call Thursday. Adjusted operating income, a non-GAAP measure, was $242 million, the company reported.
- A major pressure is coming from a weaker market consistent with LTL industry challenges, EVP and CFO John Dietrich said on the call.
Dive Insight:
In September, FedEx leadership expressed a more optimistic view for its Freight business in its current 2026 fiscal year, expecting flat or increasing revenue year over year.
But that forecast shifted to having revenue that’s flat or slightly down, the company said Thursday. The segment’s revenue was almost $2.1 billion in Q2 2026, down from nearly $2.2 billion YoY, according to an earnings release.
Multiple LTL carriers shared similar setbacks, reporting November declines in shipments and tonnage. Old Dominion Freight Line said revenue per day decreased 4.4% last month.
“Given the sustained weak LTL industry trends, we've lowered our FedEx Freight expectations for the second half of the year,” FedEx’s Dietrich said.
With that shift, the business projects a $300 million decline in adjusted operating income for FedEx Freight, compared to a $100 million decline shared in September, according to the company.
Meanwhile, the company ratcheted up its LTL sales force, getting over 85% of such staff in place, and the full team is slated to be in place by June, FedEx EVP and Chief Customer Officer Brie Carere told investors.
The Freight segment is slated to spin off on June 1, 2026, as its own company.
