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

Links:

• FedEx Ground’s Contractor Woes
• Case Dismissed: Spencer Patton Prevails Over FedEx
• Reading FedEx Ground the RICO Act
• Kelly Barner on LinkedIn
• Art of Supply LinkedIn newsletter 
• Art of Supply on AOP
• Subscribe to This Week in Procurement