FedEx Corp. recently disclosed that its board of directors has authorised FedEx Freight to undertake a far-reaching review of FedEx Freight’s contribution to its business and its plan to go ahead to conduct a complete separation from FedEx. This will eventually form a new publicly traded separate company from FedEx’s primary operations, with the separation slated for within the next 18 months in a tax efficient manner for FedEx shareholders.
This will further optimise the growth strategies of both organisations by allowing each to concentrate on its distinctive markets- global parcel and less-than-truckload sectors. This separation will allow the companies to have more specific operational performance and better strategies in allocating capital, both of which will help both companies more effectively respond to changing conditions in their markets. FedEx and FedEx Freight will be separate entities; however, the two companies will continue to tap key commercial, operational, and technology collaborations to ensure that customers enjoy the same quality of service and coverage they have enjoyed so far.
FedEx Corp. President and CEO Raj Subramaniam said the move to separate FedEx Freight is at a prime time, as the dynamics of the LTL market are changing. “This is the right time to pursue a separation,” Subramaniam said. “This announcement reflects the strength of our team and our commitment to delivering greater value for our customers, team members, and stockholders.”
R. Brad Martin, vice chairman of the FedEx board, said that this company has a strong legacy and that the separation will positively influence future growth. “FedEx has built an unmatched global platform over the past 50 years. After careful evaluation, we believe that a separation of FedEx Freight will enable us to create even more value and growth opportunities,” Martin said.
The separation represents a huge transformation for FedEx as the company seeks to unlock value in the Freight business while positioning its parent company for continued innovation and market leadership across the portfolio.
