FedEx Freight, the largest US less-than-truckload carrier, said volumes have stabilized in its first earnings report since completing its spinoff from FedEx, and announced an average 6.9% general rate increase effective January 8, 2027.
What Happened
According to FreightWaves, FedEx Freight completed its spinoff from FedEx in June and reported results for the four months from June through September after the market close on October 29, as part of a transition to calendar-year financial reporting. Revenue rose 9% year over year to $3.28 billion, revenue per day increased 8%, and adjusted earnings per share came in at $2.15, down $0.70 from a year earlier.
The revenue increase was driven by a 9% rise in revenue per hundredweight (yield), while tonnage was flat year over year. The flat tonnage reflected a 1% decline in shipments per day, offset by a 1% increase in weight per shipment. Yield excluding fuel rose just 0.3% year over year, and revenue per shipment excluding fuel increased 2%.
The company said it has repriced about 25% of its contract business since the separation and that net revenue churn has improved. It expects both volumes and yield excluding fuel to increase in the fourth quarter. Fourth-quarter revenue guidance is $2.3 billion to $2.37 billion, up 13% year over year at the midpoint, driven primarily by higher diesel fuel surcharges. Diesel prices were 48% higher year over year in the third quarter. Adjusted operating income is expected to rise 20% year over year to a range of $185 million to $205 million.
Background
FedEx Freight is the largest US LTL carrier, and its volume trends are closely watched as a barometer of US industrial and manufacturing activity. The US manufacturing complex marked its ninth straight month of expansion in September, a significant source of LTL freight. The company's local, dedicated LTL sales teams have recently won new business and driven a better freight mix across the network.
Following the spinoff, FedEx Freight operates as a standalone company under the ticker FDXF. The company said it will soon decide on a dividend and share repurchases, which would likely be used to offset dilution as FedEx unwinds its equity position. Shares of FDXF rose 3% in after-hours trading following the earnings release.
Impact on Shippers
For Chinese exporters shipping to the US, the rate increase means higher US domestic LTL last-mile costs. The average 6.9% increase takes effect January 8, 2027, and combined with sharply higher diesel surcharges, could further raise costs for LTL delivery of large items, overseas warehouse transfers, and US inland trucking.
On transit times, stabilizing volumes and an improved freight mix generally support LTL service reliability, but concentrated shipping around peak season and the rate adjustment period may require shippers to allow more time for last-mile delivery. Customs clearance itself is not directly affected, but higher last-mile costs will change overall logistics budget structures, and shippers should recalculate total door-to-door costs.
Recommendations
Shippers sending goods to the US should assess the impact of the January 2027 rate increase on last-mile costs, lock in current rates or seek transition arrangements in contract negotiations, and consider moving time-sensitive large items to overseas warehouses before the increase takes effect. They should also review chargeable weight and density factors for LTL shipments and optimize packaging to reduce per-shipment weight and volume surcharges.