FedEx Freight Holding Company, Inc. (FDXF)

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion and analysis of our results of operations and financial condition should be read in conjunction with the consolidated financial statements and corresponding notes included elsewhere in this Annual Report. The following discussion and analysis provides information management believes to be relevant to understanding the financial condition and results of operations of FedEx Freight for the years ended May 31, 2026, and 2025. For additional information on the year ended May 31, 2024, and year-over-year comparisons to May 31, 2025, refer to “Management's Discussion and Analysis of Results of Operations and Financial Condition” in our final information statement dated May 13, 2026, attached as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on May 13, 2026. This discussion contains forward-looking statements that are based upon current expectations and are subject to uncertainty and changes in circumstances. Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed below and elsewhere in this Annual Report. See Item 1A. “Risk Factors” and “Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements.

The following tables are presented in millions of U.S. dollars unless otherwise stated except for per-share amounts, which are presented in U.S. dollars.

Except as otherwise specified, references to years indicate our fiscal year ended May 31, 2026, or ended May 31 of the year referenced. The “Company,” “FedEx Freight,” “we,” “us,” and “our” refer to FedEx Freight Holding Company, Inc. and its direct and indirect subsidiaries after giving effect to the reorganization completed on May 29, 2026 in preparation for the Spin-Off or, when referencing the time period prior to the reorganization, FedEx Freight, Inc.

Description of Business

FedEx Freight is a leading North American provider of LTL freight transportation services. We offer a range of services designed to meet the diverse needs of LTL shippers including time-critical transportation needs leveraging our advanced tracking capabilities and a comprehensive network of service centers and hubs that facilitate efficient delivery and pickup. FedEx Freight’s service offerings include priority services when speed is critical and economy services when time can be traded for savings. FedEx Freight is our sole reportable segment.

FedEx Freight, Inc. was created through several acquisitions by FedEx Corporation (“FedEx”), including Viking Freight, Inc. in January 1998, American Freightways, Inc. in February 2001, and Watkins Motor Lines in May 2006. In April 2002, American Freightways, Inc. was renamed FedEx Freight East, Inc. and Viking Freight, Inc. was renamed FedEx Freight West, Inc. In May 2006, the Watkins Motor Lines business was renamed FedEx National LTL, Inc. In December 2008, FedEx Freight East, Inc. and FedEx Freight West, Inc. merged and became FedEx Freight, Inc., which was wholly owned by FedEx Freight Corporation. In January 2011, FedEx National LTL, Inc. merged into FedEx Freight, Inc. On June 1, 2024, FedEx Freight Corporation merged into FedEx Freight, Inc., and ownership of FedEx Custom Critical, Inc. (“FedEx Custom Critical”) was transferred from another FedEx subsidiary to FedEx Freight, Inc. On September 1, 2024, FedEx Freight Canada Holding Company, Inc., formerly a subsidiary of FedEx Freight Corporation, merged into FedEx Freight, Inc. and its subsidiary, FedEx Freight Canada Corp. (“FedEx Freight Canada”), became a subsidiary of FedEx Freight, Inc.

On July 14, 2025, FedEx Freight Holding Company, Inc. was incorporated to serve as the ultimate parent company of FedEx Freight, Inc. in connection with the planned Spin-Off. Subsequently, on February 11, 2026, FDXF Holding Corporation was formed as an intermediate holding company to become a direct subsidiary of FedEx Freight Holding Company, Inc. On May 29, 2026, ownership of FedEx Freight, Inc. and its subsidiaries was transferred from another FedEx subsidiary to FDXF Holding Corporation. Immediately thereafter, ownership of FDXF Holding Corporation and its subsidiaries was transferred to FedEx Freight Holding Company, Inc.

The consolidated financial statements include the consolidated results of operations, financial position, and cash flows of FedEx Freight Holding Company, Inc. and its subsidiaries for all periods presented since the reorganizations were transactions under common control. See “Summary of Results” below and Item 1. “Business” elsewhere in this Annual Report for additional information.

The key indicators necessary to understand our operating results include:

•the overall customer demand for our various services based on macroeconomic factors and the North American and global economies;

•the volumes of transportation services provided through our network, primarily measured by our average daily shipments and shipment weight and size;

•the mix of services purchased by our customers;

•the prices we obtain for our services, primarily measured by yield (revenue per shipment or hundredweight);

•our ability to manage our cost structure (capital expenditures and operating expenses) to match shifting volume levels; and

•the timing and amount of fluctuations in fuel prices and our ability to recover incremental fuel costs through our fuel surcharges.

In analyzing the components of our revenue, we monitor changes and trends in our LTL volumes and LTL revenue per hundredweight. While LTL revenue per hundredweight is a yield measurement, it is also a commonly used indicator for general pricing trends in the LTL

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industry. This yield metric is not a true measure of price, however, as it can be influenced by many other factors, such as changes in fuel surcharges and weight per shipment. As a result, changes in revenue per hundredweight do not necessarily indicate actual changes in underlying base rates. LTL revenue per hundredweight and the key factors that can impact this metric are described in more detail below:

•Revenue Per Hundredweight — Our LTL transportation services are generally priced based on weight, commodity, and distance. This measurement reflects the application of our pricing policies to the services we provide, which are influenced by competitive market conditions and our growth objectives. Generally, freight is rated by a class system, which is established by the National Motor Freight Traffic Association (“NMFTA”). Light, bulky freight typically has a higher class and is priced higher than dense, heavy freight. Fuel surcharges, accessorial charges, and revenue adjustments reflected in the “Revenue” line item in the accompanying consolidated statements of income are included in this measurement.

•Weight Per Shipment — Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand for our customers’ products and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload and intermodal, in response to capacity, service, and pricing conditions. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.

•Revenue Per Shipment — This measurement is primarily determined by the two metrics listed above and is used in conjunction with the number of LTL shipments we receive to evaluate LTL revenue.

Transition to Stand-Alone Company

FedEx Freight Holding Company, Inc. was incorporated in Delaware on July 14, 2025, for the purpose of receiving, pursuant to a reorganization, all of the outstanding equity interests of FedEx Freight, Inc. On June 1, 2026, FedEx distributed shares representing approximately 80.1% of FedEx Freight Holding Company, Inc.'s outstanding common stock to holders of record of FedEx's common stock as of the close of business on May 15, 2026 (the "Distribution"), in a Spin-Off that was tax-free for U.S. federal income tax purposes. Following the Distribution, FedEx Freight became an independent, publicly traded company. For additional information, see Note 1, Description of Business and Basis of Presentation, and Note 14, Subsequent Events, of the accompanying consolidated financial statements.

Effective for the period beginning June 1, 2026, the Company's fiscal year-end has changed from May 31 to December 31.

Relationship with FedEx

As a wholly owned subsidiary of FedEx prior to the Spin-Off, we relied on FedEx to manage certain of our operations and provide certain services, the costs of which were either allocated or directly billed to us. Historical costs for such services may not necessarily reflect the actual expenses we would have incurred, or will incur, as an independent company. In connection with the Spin-Off, we entered into the Separation and Distribution Agreement and certain other agreements with FedEx, including the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Intellectual Property Cross-License Agreement, the Trademark License Agreement, and the Stockholder and Registration Rights Agreement, as described in Item 13. “Certain Relationships and Related Transactions, and Director Independence,” which provides a framework for our relationship with FedEx after the separation. We will utilize certain FedEx services for a transitional period following the Spin-Off, but generally not longer than 24 months after the Spin-Off before we replace these services over time with services supplied either internally or by third parties. The costs for the services we receive from FedEx initially, and then internally or from third parties, may vary from the historical costs directly billed and allocated to us for the same services. Addressing the needs that arise from becoming a stand-alone company will require significant resources, including time and attention from our senior management and others throughout the Company. We will continue to monitor potential separation dis-synergies and we have incurred, and anticipate we will further incur, certain one-time costs associated with creating our own capabilities to manage operations and provide certain services we previously received as part of FedEx.

Stand-Alone Company Expenses

As a result of the Spin-Off, we have become subject to federal and state securities law and stock exchange requirements and have begun to establish additional procedures and practices as a stand-alone public company. As a result, subsequent to the Spin-Off, we have started to and will continue to incur additional expenditures consisting primarily of employee-related costs, costs to establish certain stand-alone functions and information technology systems, and other transaction-related costs. Additionally, we will continue to incur incremental costs that arise from becoming a stand-alone public company, including costs related to external reporting, internal audit, treasury, investor relations, board of directors and officers, and stock administration, as well as costs from expanding the services of existing functions, such as information technology, finance, human resources, legal, tax, facilities, branding, security, government relations, community outreach, and insurance. In line with our long-term cost strategy, we will continue to look for operational cost improvement opportunities as a stand-alone company by utilizing our lean culture and innovative technologies to drive lower costs and

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