Correction: A previous version of this article contained an inaccurate capital expenditures total. FedEx Freight's capital expenditures were $35 million in Q1 of fiscal year 2025.
Dive Brief:
- FedEx Freight slashed spending on trucks and trailers last quarter in advance of a potential spinoff or sale of the logistics giant’s LTL unit, the company reported in an earnings filing Thursday.
- The unit’s capital expenditures nosedived 62% to $35 million last quarter from $91 million in the same quarter last year, the filing said.
- “Capital expenditures decreased in the first quarter primarily due to decreased spending on aircraft and related equipment at Federal Express and decreased spending on vehicles and trailers at FedEx Freight and Federal Express,” the company said.
Dive Insight:
Reduced vehicle and trailer spending typically results in an increase in a carrier’s average fleet age, and the move would pass on equipment spending costs to a potential new owner or a spun-off independent LTL.
But the spending reductions add to FedEx's cost-savings emphasis across the company. The carrier continues to make progress with its Network 2.0 plan, which is combining its Express and Ground delivery operations in an effort to realize $2 billion in cost savings.
FedEx nearly halved its spending on trucks and trailers — a 46% drop year over year — companywide, to $90 million in Q1 of the current fiscal year from $167 million a year prior, according to the filing.
FedEx also launched its International Deferred Freight service in the quarter, offering slower transit times for non-time-sensitive freight, EVP and Chief Customer Officer Brie Carere said in an earnings call.
“We will use this extra time to both build dense skids and increase the proportion of volume that is trucked to its final destination,” Carere said.
