The pending spin-off of FedEx Corp.’s less-than-truckload division could come with a change in pricing strategy and risk for other publicly traded LTL carriers, an analyst said January 23.
Executives of FedEx last month said they will soon begin to establish FedEx Freight as its own company, a move they had first floated as an option last summer. With more than 150,000 power units, FedEx ranks No. 1 on the FleetOwner 500: For-Hire list. The FedEx Freight operations have about 30,000 power units and handle about 92,000 shipments per day on average. By comparison, Old Dominion Freight Line’s LTL group handles about half that number, and Knight-Swift Transportation, which has built a near-national LTL operation in recent years, handled almost 22,000 shipments daily in the last quarter.
Setting up that market-leading business as an independent operation would impact the market. Speaking on his team’s 2025 outlook webinar, Stifel analyst Bruce Chan said he has come to reframe some of his thinking about how a stand-alone FedEx Freight would act. A key point to consider, Chan said, is Tom Connolly, VP of LTL sales, plans to hire more than 300 people.
See also: FedEx to spin off its LTL operations in coming months
That figure, Chan noted, is between five and six times the number of dedicated LTL salespeople FedEx now has. It could signal, he added, that FedEx Freight would compete on price more aggressively than it has historically and that growth would be a central part of the story its leaders would tell investors as a stand-alone company.
“That’s got to mean something in terms of market-share grab,” Chan said of the hiring plan. “That’s a risk people need to be cognizant about” when investing in or evaluating other LTL carriers.
During his presentation, Chan said the Stifel team thinks a freight market turn in 2025 will be gradual and driven by a decline in capacity rather than the demand-driven recoveries of the past. Because of that, volumes will likely remain “flattish” for a while in several parts of the trucking sector, and rates are unlikely to strengthen quickly in the months ahead. A FedEx looking to build market share would contribute to that dynamic.
Stifel's relatively cautious outlook for freight volumes is more in line with the 2025 forecast from FTR Transportation Intelligence, which recently predicted growth of about 1% this year. Analysts at the American Trucking Associations and ACT Research are calling for truck volumes to grow 1.6% and 1.8%, respectively. You can read more about those forecasts here.
