FedEx Freight saw both revenue and shipment volumes decline in its fiscal third quarter, underscoring how fragile the US industrial economy remains as the company moves toward the planned spin-off of its less-than-truckload business in June.
For the quarter covering December through February, revenue at FedEx Freight fell 5% year over year to $1.99 billion. Shipments declined 6% over the same period. The one brighter metric was revenue per shipment, which edged up 1%, suggesting that pricing discipline is still holding despite softer volumes.
Marshall Witt, chief financial officer of FedEx Freight, told analysts that the weakness was not unique to the company but reflective of the broader LTL environment. He said the focus remains on improving yield growth, strengthening the customer experience and maintaining discipline in pricing during contract renewals.
FedEx expects the pressure to continue in the near term, warning that fourth-quarter and full-year LTL revenue will likely decline by low-single-digit percentages compared with the previous year.
Even so, the bigger strategic discussion around the business has shifted toward the spin-off itself. The company is set to host an investor day on April 8, where it plans to outline a standalone LTL strategy built around profitability rather than simply chasing volume.
That change could have important implications for shippers. As an independent company, FedEx Freight may decide to turn away lower-margin or unprofitable freight that it might previously have accepted as part of a broader commercial relationship involving FedEx parcel, logistics or airfreight services.
The company has already been laying the groundwork for the transition. FedEx Freight has hired sales and operations teams, established new IT systems and completed a $3.7 billion debt offering in January to support the separation. Witt said these investments should be viewed as positive costs because they are tied directly to building the infrastructure, platforms and talent needed for the LTL business to operate successfully on its own.
FedEx also pointed to a possible longer-term tailwind from the expansion of data centers. Brie Carere, the group’s chief commercial officer, said that while much of the attention around data centers focuses on parcel, they are also expected to generate LTL opportunities through the movement of equipment and related freight.
Despite the weak quarter, there are a few signs that the wider LTL market may be stabilizing. The Institute for Supply Chain Management said the manufacturing Purchasing Managers’ Index reached 52.4 in February, marking a second straight month in expansion territory after most of 2025 had remained in contraction.
Other carriers have also reported mixed but slightly more encouraging figures. ArcBest said revenue per day was up 1% and shipments rose 2% in January and February combined. XPO reported a 3% year-over-year increase in shipments per day in February, although it did not disclose revenue. Old Dominion Freight Line, however, continued to show weakness, with revenue per day down 3.3% and shipments off 7% in February.
For FedEx Freight, the next few months will be less about short-term volume recovery and more about proving that its future as a standalone LTL operator can deliver stronger margins, sharper pricing discipline and a more focused commercial model.
