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GAIN CONSULTING

How an Independent FedEx Freight Plans to Grow: Opportunities for U.S. Shippers in 2025

  • Kelsea Ansfield
  • 2 minutes ago
  • 8 min read


At Gain Consulting, we are dedicated to helping U.S. shippers navigate the evolving logistics landscape with strategic insights and tailored solutions. The announcement that FedEx Freight, the less-than-truckload (LTL) division of FedEx Corp., will become a standalone company in 2026 marks a pivotal moment for the freight industry. As reported by FleetOwner on May 23, 2025, Chief Customer Officer Brie Carere outlined FedEx Freight’s ambitious growth strategy at the Bank of America Industrials, Transportation & Airlines Key Leaders Conference, emphasizing a focus on small-business customers, e-commerce expansion, and grocery market penetration. This blog post delves into FedEx Freight’s growth plans, their implications for U.S. shippers, and actionable strategies to leverage these changes in 2025.


FedEx Freight’s Spin-Off: A New Chapter for LTL

FedEx Corp., with annual revenues of $87 billion and ranked No. 1 on the 2025 FleetOwner 500 list of for-hire carriers, plans to spin off its LTL division, FedEx Freight, into an independent, publicly traded company by 2026. Operating approximately 30,000 power units and handling 85,000 shipments daily in its most recent fiscal quarter, FedEx Freight is a powerhouse in the LTL sector. The spin-off, announced in December 2024, aims to unlock value by allowing FedEx Freight to operate with greater focus and agility, free from competing for resources within the broader FedEx enterprise.


The transition will be led by John Smith, appointed president and CEO of the independent FedEx Freight, who previously ran the division from 2018 to 2021. Smith, a 25-year FedEx veteran, will work alongside Brad Martin, vice chairman of FedEx’s board, who will chair the new FedEx Freight board. “I cannot think of two individuals with more knowledge of, or commitment to, the long-term success of the FedEx Freight business,” said Raj Subramaniam, FedEx’s president and CEO. The spin-off is expected to be tax-free for U.S. FedEx stockholders, with costs incurred in Q3 2025 primarily related to securing the release of FedEx Freight’s guarantee on certain FedEx senior notes.


Brie Carere highlighted that FedEx Freight’s growth has been constrained by underinvestment, particularly in technology, due to competition with FedEx Ground for IT resources. “From a FedEx Freight perspective, we did a really good job, but it was competing with FedEx Ground for a lot of investment on the IT side. So in hindsight, we probably underinvested,” she said. The spin-off will enable FedEx Freight to address these gaps, prioritizing investments in technology to enhance billing accuracy, shipment visibility, and customer experience.

Key Takeaway: The spin-off positions FedEx Freight to operate independently, focusing on targeted growth initiatives and technological upgrades to better serve shippers in a competitive LTL market.


FedEx Freight’s Growth Strategy: Three Core Pillars

At the Bank of America conference, Carere outlined three key areas for FedEx Freight’s growth as an independent entity, each with significant implications for U.S. shippers:

1. Winning Small-Business Customers

FedEx Freight has identified small and medium-sized businesses (SMBs) as a top priority for growth, acknowledging that it has “not done a good enough job in acquiring small customers.” SMBs represent a significant opportunity, with 95% of U.S. SMB leaders viewing global trade as vital for economic growth and 78% believing increased trade benefits their businesses, according to the 2025 FedEx Small Business Trade Index. Additionally, 61% of SMBs export goods, and 76% import products, highlighting their active role in freight markets.

Currently, FedEx Freight’s customer base is heavily weighted toward larger enterprises, but the independent company aims to capture a larger share of the SMB market by offering tailored LTL solutions. This includes simplified pricing, enhanced digital tools, and flexible scheduling to meet the needs of smaller shippers. Carere emphasized that improving the customer experience through technology—such as real-time tracking and streamlined billing—will be critical to attracting and retaining SMBs.

2. Expanding E-Commerce Business

E-commerce, which accounts for 10% of FedEx Freight’s revenues, is another key growth area. The FedEx 2025 E-Commerce Trends Report underscores the importance of convenience and seamless post-purchase experiences, with 80% of shoppers prioritizing home delivery, 76% expecting free shipping, and 68% demanding real-time tracking. FedEx Freight plans to grow its e-commerce share by outpacing market growth, leveraging its extensive network covering the U.S., Canada, Mexico, Puerto Rico, and the U.S. Virgin Islands.

The rise of e-commerce has increased demand for LTL services to handle larger or bulk shipments, such as furniture or appliances, often requiring white-glove delivery. FedEx Freight aims to enhance its omni-channel solutions, integrating with e-commerce platforms to provide seamless shipping experiences. For example, FedEx’s existing integrations allow e-tailers to generate shipping labels and access express or international services directly from marketplaces, a capability FedEx Freight plans to expand.

3. Building Market Share in Grocery Stores

Historically, grocery has not been a focus for FedEx Freight, but the company sees untapped potential in this sector. Carere noted, “We’ve got a pretty good handle on where we can kind of profitably take the next couple of points of share.” The grocery market requires specialized LTL services, such as temperature-controlled transport for perishables and time-sensitive deliveries to meet restocking schedules. FedEx Freight’s existing reefer capabilities and network reach position it to compete with established players like XPO Logistics and Old Dominion Freight Line.

The grocery sector’s growth is driven by rising consumer demand for fresh and frozen goods, with U.S. grocery e-commerce sales projected to reach $159 billion by 2026, according to Statista. FedEx Freight plans to capitalize on this by offering reliable, high-frequency deliveries to distribution centers and stores, supported by investments in fleet modernization and automation.

Key Takeaway: FedEx Freight’s growth strategy focuses on capturing SMBs, expanding e-commerce capabilities, and penetrating the grocery market, supported by significant technology investments to enhance service reliability and customer experience.


Contextual Factors Shaping FedEx Freight’s Strategy

Several industry trends and internal factors underpin FedEx Freight’s growth plans, as evidenced by recent reports and FedEx’s broader transformation efforts:

  1. Market Challenges and Economic Pressures: FedEx Freight’s Q3 2025 results showed a decline in operating results due to lower fuel surcharges, reduced weight per shipment, and fewer shipments, partially offset by higher base yields. The industrial economy’s weakness has pressured B2B volumes, particularly in freight, as noted by CEO Raj Subramaniam. These challenges highlight the need for diversification into SMBs, e-commerce, and grocery markets.

  2. FedEx’s DRIVE Program and Network Optimization: FedEx’s DRIVE initiative, which saved $600 million in Q3 2025, focuses on operational efficiency through network consolidation and automation. The closure of seven small-market facilities in Q3 reflects FedEx Freight’s efforts to streamline its network, freeing resources for growth initiatives. The spin-off aligns with DRIVE’s goal of creating a leaner, more agile operation.

  3. Technology Investment Needs: FedEx Freight’s historical underinvestment in IT, as admitted by Carere, has limited its ability to compete in digital-first markets. The 2025 FedEx Small Business Trade Index found that 9 in 10 SMBs rely on e-commerce platforms for global trade, underscoring the need for advanced digital tools. FedEx Freight’s planned investments in AI, machine learning, and real-time analytics aim to address these gaps.

  4. E-Commerce and Consumer Trends: The FedEx 2025 E-Commerce Trends Report highlights shifting consumer behaviors, with Gen Z favoring digital-first interactions (51% discover brands via TikTok) and Millennials prioritizing brand values (81% consider employee treatment). FedEx Freight’s e-commerce push aligns with these trends, focusing on convenience and personalized services.

  5. Competitive LTL Landscape: The LTL market is highly competitive, with players like Old Dominion, XPO, and Saia vying for market share. FedEx Freight’s focus on SMBs and grocery markets aims to differentiate it from competitors, while its e-commerce expansion leverages FedEx’s broader network strengths. The spin-off provides the flexibility to pursue these niches without resource constraints.

Key Takeaway: FedEx Freight’s growth plans are shaped by market challenges, the need for technological upgrades, and opportunities in e-commerce and grocery sectors, supported by FedEx’s DRIVE program and a competitive LTL landscape.


Implications for U.S. Shippers

FedEx Freight’s growth strategy offers both opportunities and challenges for U.S. shippers, particularly SMBs, e-commerce businesses, and those in the grocery supply chain:

  1. Enhanced Options for SMBs: FedEx Freight’s focus on SMBs will provide smaller shippers with access to reliable LTL services, competitive pricing, and digital tools tailored to their needs. However, shippers may face initial onboarding challenges as FedEx Freight scales its SMB-focused operations.

  2. Improved E-Commerce Capabilities: The expansion of e-commerce services will benefit shippers handling larger or bulk shipments, with improved tracking and integration with e-commerce platforms. However, shippers must ensure their packaging and processes align with FedEx Freight’s requirements to avoid delays.

  3. Grocery Market Opportunities: Grocery shippers can leverage FedEx Freight’s entry into this sector for cost-effective, time-sensitive deliveries. However, competition from established LTL providers may lead to pricing pressures or service variability during the ramp-up phase.

  4. Technology-Driven Efficiency: Investments in AI and analytics will enhance shipment visibility and billing accuracy, benefiting shippers with complex supply chains. However, shippers may need to adapt to new digital interfaces or APIs to fully utilize these tools.

  5. Potential Cost Implications: While base yields are improving, lower fuel surcharges and market pressures could lead to rate volatility. Shippers should monitor FedEx Freight’s pricing post-spin-off, as investments in technology and network expansion may drive cost increases.

Key Takeaway: U.S. shippers stand to gain from FedEx Freight’s focus on SMBs, e-commerce, and grocery markets, but must navigate potential onboarding, pricing, and integration challenges as the company transitions to independence.


Strategic Recommendations for U.S. Shippers

To capitalize on FedEx Freight’s growth plans and mitigate risks, Gain Consulting recommends the following strategies for U.S. shippers in 2025:

  1. Engage Early with FedEx Freight for SMB Services: SMBs should contact FedEx Freight to explore tailored LTL solutions, such as volume discounts or simplified pricing. Leverage FedEx’s Small Business Center for resources on shipping options and marketing tips.

  2. Optimize E-Commerce Shipping Processes: Align packaging and fulfillment processes with FedEx Freight’s e-commerce requirements, focusing on dimensional weight optimization and palletization for LTL shipments. Use platforms like Shopify or BigCommerce with FedEx integrations for seamless label generation.

  3. Partner for Grocery Logistics: Grocery shippers should negotiate service-level agreements (SLAs) with FedEx Freight to ensure reliable, temperature-controlled deliveries. Monitor performance metrics like on-time delivery rates during the initial rollout phase.

  4. Adopt Technology for Integration: Invest in a Transportation Management System (TMS) to integrate with FedEx Freight’s upgraded digital tools, enabling real-time tracking and analytics. Platforms like FreightSideKick offer data-driven insights to complement FedEx’s technology investments.

  5. Monitor Pricing and Contract Terms: Track FedEx Freight’s rate changes post-spin-off through resources like DAT One or TransImpact. Negotiate flexible contracts with clauses for fuel surcharge caps to hedge against volatility.

  6. Diversify Carrier Portfolio: Balance reliance on FedEx Freight with other LTL providers like XPO, Saia, or Old Dominion to mitigate risks during the transition. Use Freightos to compare rates and secure capacity across carriers.

  7. Leverage Industry Insights: Join associations like the Council of Supply Chain Management Professionals (CSCMP) or Parcel Shippers Association to stay informed on FedEx Freight’s progress and advocate for shipper-friendly policies.

  8. Prepare for Peak Season: Anticipate increased demand in Q4 2025, particularly for e-commerce and grocery shipments. Secure capacity commitments with FedEx Freight early and explore FedEx’s International Connect Plus for cross-border needs.

Key Takeaway: Shippers should engage proactively with FedEx Freight, optimize e-commerce and grocery logistics, adopt technology, and diversify carriers to maximize benefits from the spin-off while managing risks.


How Gain Consulting Can Support Your Success

Gain Consulting is your trusted partner in navigating FedEx Freight’s transformation and the broader LTL market in 2025. Our tailored solutions empower U.S. shippers to thrive in a dynamic environment:

  • Carrier Strategy Development: Build a diversified carrier portfolio integrating FedEx Freight with other LTL providers to balance cost and reliability.

  • Technology Integration: Deploy TMS and analytics platforms to leverage FedEx Freight’s digital upgrades, enhancing visibility and efficiency.

  • Contract Negotiation Support: Optimize FedEx Freight agreements to secure competitive rates, surcharge caps, and value-added services.

  • E-Commerce and Grocery Solutions: Design strategies for e-commerce fulfillment and grocery logistics, aligning with FedEx Freight’s growth priorities.

  • Market Intelligence: Provide real-time updates on FedEx Freight’s spin-off progress, pricing trends, and industry developments to inform your planning.


FedEx Freight’s spin-off and growth strategy—focused on small-business customers, e-commerce, and grocery markets—offers significant opportunities for U.S. shippers in 2025. By partnering with Gain Consulting, you can position your supply chain to capitalize on these changes while navigating potential challenges. Contact Gain Consulting today to build a resilient, future-ready logistics strategy that drives success in the evolving LTL landscape.


Sources: FleetOwner, May 23, 2025; FedEx 2025 E-Commerce Trends Report, February 18, 2025; FedEx 2025 Small Business Trade Index, April 29, 2025; Digital Commerce 360, March 27, 2025; Supply Chain 24/7, June 14, 2024; FedEx Q3 2025 Earnings Release, March 20, 2025

 
 
 
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