Will FedEx Freight hit the open road?
Episode description
On June 26th, The Wall Street Journal reported that FedEx plans to spin off their freight division - and the most interesting part is why.
FedEx Freight is the less-than-truckload (LTL) division of the company. It is the most profitable division, with a recent operating margin over 20 percent, compared to 11.8 percent for FedEx Ground and 2 percent for FedEx Express.
The company has realized that the division is so successful it will generate more shareholder value on its own. With estimated valuations between $30 and 50 Billion, it is too big to be bought, but too small of a division of FedEx to stay. Pending an internal review scheduled to be complete later this year, FedEx Freight is likely to have a future as a standalone company.
In this episode of the Art of Supply podcast, Kelly Barner covers this story in the larger context of supply chain operations, investment, and profitability:
- Providing an overview of the current LTL landscape
- Comparing FedEx Freight’s performance with UPS Freight, which the company spun off in 2021
- Considering what this move may mean for the supply chain as a whole and for procurement professionals tasked with managing LTL spend
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