FedEx Freight (FDXF) Stock Falls 7% on Debut — CEO Says the Best Is Ahead

TLDR

• FedEx Freight began trading independently on Monday after being spun off from FedEx
• CEO John Smith says independence will let the company invest more aggressively in LTL-specific growth
• The company targets a 15% operating margin by 2029, up from ~12% today — and Smith says that’s “not the ceiling”
• FedEx Freight has been testing autonomous trucks on Dallas-to-Houston and Dallas-to-El Paso routes for two years
• CEO says self-driving technology is ready, but regulation is the biggest hurdle to deployment

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FedEx Freight opened its first day as a standalone public company on Monday, with CEO John Smith ringing the opening bell at the New York Stock Exchange. The stock traded under the ticker FDXF, closing down 6.76% on its debut.

FedEx Freight Holding Company, Inc., FDXF

The spinoff separates North America’s largest less-than-truckload carrier from its parent, FedEx. FedEx Freight brought in $8.7 billion in annual revenue — roughly 10% of FedEx’s $90 billion total. Smith has said the unit often took a backseat inside the larger company.

“The things that we are going to be able to control now, especially from a capital and investment perspective — that’s going to help us leapfrog the competitors,” Smith told CNBC’s Mad Money.

Margin Target in Focus

The company has set a clear financial goal: reach a 15% operating margin by 2029, up from around 12% today. Smith didn’t stop there, saying the target is “not the ceiling.”

To get there, FedEx Freight plans to invest in customer-facing technology, build out its dedicated sales force, and tighten operations. All areas that Smith says were harder to prioritize inside a $90 billion company.

Smith also pushed back on macro concerns, saying the company can grow market share even in a soft economy. “With our strategy, we feel like that we can grow in a down economy,” he said.

Competitors in the LTL space include Old Dominion Freight Line, XPO, and ArcBest. XPO fell 2.02% and ArcBest added 0.70% on Monday.

Autonomous Trucks: Technology Ready, Regulators Not

One of the more eye-catching parts of Smith’s Monday interviews was his take on self-driving trucks.

FedEx has been running autonomous test loads from Dallas to Houston and Dallas to El Paso for the past two years. Safety drivers are present, but Smith says they’re barely needed.

“99.9% of the time the driver never touches one thing,” he said.

Smith is confident the technology works. The holdup, he says, is regulatory and political — not mechanical.

“It’s nowhere close to being where the general public will allow an 80,000-pound vehicle running 65 miles an hour with no human in the cab,” he said.

On the EV side, Smith was more cautious. FedEx Freight runs mostly Class 8 tractors, and he said no electric solution currently exists that can handle a 600-mile trip. The company is focused on compressed natural gas for now, while using electric forklifts and hostlers where it can.

Smith also noted that the autonomous testing program has had a secondary benefit: improved safety technology across the broader fleet, including collision avoidance, lane departure warnings, and rollover stability systems.

On fuel costs, Smith said FedEx Freight will continue using fuel surcharges, which are negotiated into customer contracts. He said customers understand the cost given the company runs 1.3 billion miles per year.

Smith has been with FedEx since 2000 and was previously COO of FedEx Ground operations in the U.S. and Canada before being named FedEx Freight CEO last May.