FedEx’s New Reporting Structure Puts Spotlight on LTL Segment
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Two weeks ahead of its first quarter earnings call, FedEx officially unveiled its new financial reporting structure as part of its “One FedEx” consolidation plan.
In a Tuesday filing with the Securities and Exchange Commission (SEC), the parcel shipping giant outlined its fiscal 2023 and 2024 financial performance as consolidated into two reportable business segments: Federal Express and less-than-truckload (LTL) freight transportation services provider FedEx Freight.
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The switch had been a year in the making, and the reporting shift was first announced during FedEx’s fourth-quarter earnings call in June.
The two segments are cut down from the four units listed in prior quarterly reports. This comprised of FedEx Ground, FedEx Express and shipping services division FedEx Services.
FedEx says the FedEx Ground and FedEx Services units were officially merged into Federal Express (which dropped the FedEx Express branding) on June 1.
Another one of the company’s services, FedEx Custom Critical, will be included in the FedEx Freight unit to kick off the 2025 fiscal year, moving from the previous FedEx Express segment. The logistics provider offers that group of services to consumers seeking a premium shipping service for urgent, temperature-sensitive, valuable or hazardous shipments.
The streamlining serves beyond a cosmetic purpose, as the company has sought to cut $4 billion in costs by the end of fiscal 2025, with CEO Raj Subramaniam saying in the June earnings call that the goal is “firmly on track.” On top of that, FedEx seeks to save an additional $2 billion by 2027.
Additionally, the reporting consolidation forms the company more in line with chief rival UPS, which has its air, ground and services integrated within one network.
With FedEx Freight being the lone individual unit not integrated with the rest of the reportable business segments, the spotlight will be on the trucking branch.
It is still to be determined if the segment is going to be part of the Memphis, Tenn-based shipping firm’s long-term plans. FedEx is currently reviewing the LTL business, which is currently the largest in the U.S., operating nearly 30,000 motorized vehicles and approximately 360 service centers in North America as of June 7. That review is not expected to be completed until the end of the calendar year, according to Subramaniam.
Under the new reporting structure, both the Federal Express and FedEx Freight segments saw slight revenue declines in 2024, with the former declining 1.6 percent to $74.7 billion and the latter falling 6.5 percent to $9.4 billion.