FedEx to Spin Off $8.9B Freight Unit, Targets $1B Cost Cuts
FedEx will spin off FedEx Freight, which generated $8.9 billion in fiscal 2025 revenue, on June 1, 2026, driving a 21% stock surge over the past 30 days. Its DRIVE program aims for $1 billion in annual cost savings while merging air and ground networks and securing a 37% stake in €7.8 billion InPost locker network.
1. Spin-Off of FedEx Freight
FedEx will separate its FedEx Freight unit into a standalone public company on June 1, 2026, distributing FDXF shares tax-free to existing shareholders. The LTL unit generated approximately $8.9 billion in fiscal 2025 revenue, and the move aims to eliminate the conglomerate discount and unlock premium carrier multiples.
2. DRIVE Program and Network 2.0
The DRIVE initiative targets $1 billion in permanent cost savings this fiscal year by consolidating Express and Ground networks into a unified surface logistics system. The program includes closure of over 475 redundant stations by 2027 and air network redesign using owned Purple and Orange jets alongside partner capacity White operations.
3. Fleet Utilization with MD-11 Aircraft
FedEx plans to return its grounded MD-11 fleet to service by May 31, 2026, leveraging the aircraft’s high cargo density on daytime Orange routes. This strategy shifts heavy freight to less urgent slots, optimizing asset utilization without congesting premium overnight networks.
4. European Expansion via InPost Acquisition
FedEx acquired a 37% stake in InPost for €7.8 billion to integrate over 60,000 automated parcel lockers across Europe. This investment reduces last-mile delivery costs, neutralizes competitors’ residential advantages, and positions FedEx for higher-margin growth in European markets.