FedEx Freight Holding Company, Inc. (FDXF) Business

ITEM 1. BUSINESS

Company Overview

Headquartered in Memphis, Tennessee, FedEx Freight is the largest North American less-than-truckload (“LTL”) freight carrier, with industry-leading transit times and service levels, offering choice, simplicity, and reliability to meet the needs of LTL shippers while operating ethically with a commitment to “Safety Above All.” As of June 1, 2026, we had approximately 40,000 employees, over 365 locations, including approximately 355 shipping terminals (over 320 of which are in the United States) and approximately 10 linehaul relay sites, and nearly 30,000 motorized vehicles, of which nearly 17,000 are tractors, across all 50 U.S. states, Canada, and Mexico. We also offer freight delivery service to most points in Puerto Rico and the U.S. Virgin Islands. Our robust network established through almost 60 years of operations and consisting of more than 26,000 service center doors strategically positioned in high-demand regions provides critical services that facilitate the transport of goods in North America and powers the supply chains of our customers. Our services and solutions support companies of all sizes, industries, and specialties, and our proximity to our customers allows us to transport their goods quickly, reliably, and efficiently.

Our LTL portfolio consists of two complementary service offerings designed to address distinct customer shipping requirements, serving both time-critical and cost-sensitive freight across a single integrated network:

•FedEx Freight Priority: A premium, time-definite LTL service designed for shipments requiring the fastest available transit. Priority offers industry-leading published transit times, including next-business-day service for shipments traveling up to 600 miles and second-business-day service for shipments traveling up to 1,600 miles. The service provides broad coverage across the United States, Canada, and Mexico and is backed by a money-back service guarantee if published delivery commitments are not met, providing customers with a high degree of reliability for time-critical freight.

•FedEx Freight Economy: A value-oriented LTL service designed for shipments with more flexible transit requirements. Economy provides broad coverage across the United States and Canada, including service to and from Puerto Rico and service to the U.S. Virgin Islands through strategic alliances. The service offers reliable and cost-effective transportation for customers seeking to optimize shipping costs while maintaining consistent service performance. Shipments moving under FedEx Freight Economy are generally not covered by a money-back service guarantee.

In addition, FedEx Custom Critical provides expedited, time-specific freight solutions, including Surface Expedite and White Glove Services, available 24/7/365, which are discussed further below under “Business Strategy and Operations.”

Customers can also process domestic and cross-border LTL shipments to and from Canada and Mexico, as well as intra-Canada and intra-Mexico shipments, through our digital customer platforms, including LTL Select, a free cloud-based, multi-carrier transportation management system.

We have a number of ongoing initiatives intended to continue optimizing our operating model and financial performance, which are discussed further below under “Business Strategy and Operations.”

Spin-Off from FedEx Corporation

Prior to June 1, 2026, FedEx Freight operated as a group of wholly owned subsidiaries of FedEx. On December 19, 2024, FedEx announced its plan to spin-off FedEx Freight into an independent, publicly traded company. On June 1, 2026, FedEx completed the Spin-Off through its distribution of 80.1% of the outstanding shares of our common stock on a pro-rata basis to the holders of FedEx common stock. Following the Spin-Off, our common stock began trading under the ticker symbol “FDXF” on the New York Stock Exchange (“NYSE”).

See Item 7. “Management’s Discussion and Analysis of Results of Operations and Financial Condition” for information regarding costs and other financial-related items related to the Spin-Off and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for information regarding the agreements FedEx Freight entered into with FedEx in connection with the Spin-Off.

Change in Fiscal Year

Effective for the period beginning June 1, 2026, the Company's fiscal year-end has changed from May 31 to December 31. Except as otherwise specified, any reference to a year in this Annual Report indicates our fiscal year ended May 31, 2026 or ended May 31 of the year referenced, and comparisons are to the corresponding period of the prior year.

Industry Overview

Trucking companies provide two main types of services across industries and end-markets: truckload (“TL”) and LTL services. We are the largest provider of LTL services to customers across North America. The LTL industry is a segment of the freight transportation market that specializes in the consolidation and transport of shipments that do not require the full capacity of a truck trailer. This model allows LTL providers to offer cost-effective solutions for businesses that need to ship goods between various locations but do not have sufficient freight to justify hiring a full TL carrier. LTL carriers utilize network-based production logic to link different shipments into multi-stop routes and benefit from a semi- or fully-scheduled linehaul. This results in LTL carriers typically requiring a more expansive and sophisticated network of local pickup and delivery as freight is picked up from multiple customers and routed through a network of

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service centers and transferred to other trucks with similar destinations. This sophisticated network structure enables shippers to flexibly manage variable shipment volumes and dispatch freight on demand.

There are certain market dynamics that influence LTL services with respect to pricing, routing, and carrier options that are different from the TL operating models. Customer pricing for TL solutions is typically rigid with one price for the entire trailer, irrespective of the shipment size, while LTL offerings are typically more flexible, with origin, destination, class, and weight being the drivers of price. This makes LTL generally more cost-effective than TL for shipments smaller than a full trailer, due to its hub-and-spoke routing model with cross-docking across terminals. In contrast, TL typically operates point-to-point without consolidation terminals, using customized, on-demand routes that may be non- or semi-scheduled. Historically, there has been more favorable pricing and economics in the North American LTL market, which consists of approximately 10 scaled players, as compared to the more fragmented North American TL market.

Business Strategy and Operations

FedEx Freight’s strategy builds on our expansive scale, diversified and premium service capabilities, and a tech-enabled platform to further differentiate our service offerings and drive profitable growth. Our strengths and strategy to grow our business include the following.

Largest LTL Pure-Player with Exceptional Network Scale and Proximity

We are the largest LTL freight carrier in North America with more than 26,000 service center doors and established infrastructure and coverage across 98% of all ZIP Codes in the United States (exclusive of military and PO ZIP Codes) as of June 1, 2026. Our network is strategically aligned with the densest freight corridors in the United States and we have built our infrastructure to serve these high-demand areas efficiently. The combination of our service center door count and proximity to the customer base enables greater supply chain flexibility and efficiency, specifically cross-docking, which streamlines the loading process. This, combined with our fleet size, accelerates our speed and enhances our quality of service. FedEx Freight’s network proximity generally allows it to maintain consistent service levels even during peak periods, as demonstrated by our ability to flex capacity during peak shipping seasons.

Robust Commercial Value Proposition with Differentiated Dual-Service Offering

We have established a comprehensive dual-service model and set of differentiated offerings to provide customers with flexibility to optimize their supply chains based on shipment urgency and service requirements.

Core Products

•FedEx Freight Priority: A premium, time-definite service offering the fastest published transit times in the industry (typically one to three days). Priority enables customers to meet urgent delivery requirements while maintaining end-to-end shipment visibility and reliability.

•FedEx Freight Economy: A value-oriented LTL service for shipments with more flexible transit requirements (typically three to six days). Economy provides reliable, cost-effective transportation for customers seeking to optimize shipping costs while maintaining consistent service performance.

Differentiated Offerings

•Volume Services: Offers customized pricing solutions for qualifying non-urgent shipments based on network capacity, enabling us to capture overflow demand from sectors prioritizing cost efficiency over speed, such as bulk retail and industrial components. The program fills otherwise empty capacity with profitable freight while still supporting unique customer needs.

•Custom Critical Services: Addresses the needs of customers with highly time-sensitive or high-value shipments. These shipments are delivered via “straight through” routing, with no intermediate stops, ensuring maximum speed and security.

•FedEx Freight Direct: Provides multiple service tiers for residential and commercial deliveries with value-added options such as inside delivery and packaging removal.

•Retail Flex: Provides delivery to large retailers with benefits that support consistent on-time, retailer-compliant deliveries.

Multi-Faceted Commercial Initiatives

We are executing on multi-faceted commercial initiatives to elevate our value proposition, strengthen go-to-market effectiveness, and enhance and simplify the customer experience. These include streamlining online tools, improving customer support channels, reducing cargo claims, and offering more flexible service options to enhance the customer experience. In connection with the Spin-Off, we rapidly scaled a dedicated LTL sales organization, attracting top industry talent that is focused on providing a leading customer value proposition supported through a superior delivery experience and data-driven, personalized service.

In addition to pursuing growth across the full customer base, we are focused on incremental growth from several verticals and end markets such as: small and medium sized businesses (“SMBs”), healthcare, grocery, and data centers and energy. We have undertaken numerous related commercial initiatives, including scaling field sales for SMB growth; grocery channel expansion through preferred carrier status; and healthcare product solutions leveraging FedEx Custom Critical.

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Proprietary and Digitally Enabled Technology Platform

We leverage technology extensively to enhance our operational efficiency, improve customer service, and differentiate the Company. A key aspect of this is the integration of advanced technology solutions, such as LTL Select, across our network. This platform provides customers with streamlined online experiences for managing their LTL shipments. This includes functionalities such as:

•Online Quoting: Instant rate quotes based on shipment details (weight, dimensions, destination).

•Shipment Booking: Easy online booking and scheduling of pickups.

•Tracking and Visibility: Real-time tracking of shipments from origin to destination, providing transparency and control.

•Reporting and Analytics: Access to data and reports on shipping activity, enabling customers to optimize their supply chain.

Beyond customer-facing and commercial tools, we employ a range of technologies to optimize our internal operations. We are systematically improving our visibility to movements on the dock through proprietary dock software and real-time tracking systems that reduce handling errors and improve throughput. Other initiatives include:

•Route Optimization: Utilizing sophisticated algorithms to plan the most efficient routes for trucks and minimize fuel consumption and transit times.

•Load Planning: Optimizing how freight is loaded onto trailers to maximize space utilization and minimize damage.

•Electronic Logging Devices: Promoting compliance with regulations regarding driver hours of service and improving safety.

•Radio-Frequency Identification (“RFID”) Tracking: Allowing for real-time analytics and improved network visibility.

We also utilize data analytics and AI to improve decision-making:

•Demand Forecasting: Predicting future demand to optimize resource allocation and capacity planning.

•Risk Management: Identifying and mitigating potential risks to the supply chain, such as weather delays or traffic congestion.

Trademarks and Other Intellectual Property

Generally, our products and services are marketed under trademarks that are owned by Federal Express Corporation, a wholly owned subsidiary of FedEx (“Federal Express”). Federal Express owns numerous trademarks and other intellectual property rights relating to the “FedEx” name and brand, including “FedEx Freight.” Federal Express licenses the use of certain trademarks to support its business and takes active measures to enforce its intellectual property rights where appropriate. The FedEx and FedEx Freight trademarks are important to our business.

In connection with the Spin-Off, we entered into a Trademark License Agreement with Federal Express (the “Trademark License Agreement”) that provides us with a license to continue to use certain names, trademarks, and brands owned by Federal Express or its affiliates, including the “FedEx Freight” name and mark.

Also, in connection with the Spin-Off, on May 31, 2026, we entered into an Intellectual Property Cross-License Agreement with FedEx, Federal Express, and FedEx Dataworks, Inc., a wholly owned subsidiary of FedEx (“FedEx Dataworks”) (the “Intellectual Property Cross-License Agreement”) pursuant to which FedEx Freight and each of FedEx, Federal Express, and FedEx Dataworks have granted and received licenses to and from each other in respect of certain patents, know-how, and copyrights. See Item 1A. “Risk Factors” and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional information on the Trademark License Agreement and the Intellectual Property Cross-License Agreement.

Customers and End-Markets

We provide services to approximately 108,000 active customers across a broad range of sizes, end-markets, and geographies. In 2026, our top five and top 25 customers accounted for just 9% and 21% of our revenue, respectively. Our largest customer accounted for approximately 4% of our revenue in 2026.

We are a long-term, critical supply chain partner to a diverse customer base including large, market-leading national players in addition to regional companies and/or SMBs. A large number of our customers operate in sectors that we believe are poised for long-term structural growth, such as e-commerce, advanced manufacturing, and healthcare logistics. Additionally, we believe that our relationship with our customers through a dedicated LTL salesforce allows us to truly understand our customers’ challenges to provide tailored and effective solutions. Our cross-border capabilities in Canada and Mexico, along with partnerships for less-than-container load shipments in Europe and Asia, support efficient international logistics.

Competition

Despite several strategic combinations in our industry in recent years, shippers continue to have a wide range of options for their LTL freight. The strength and size of our network enable us to deliver high-quality service, speed, geographic coverage, responsiveness, and flexibility.

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Our competitors include local, regional, and national LTL carriers, as well as a range of other transportation and logistics providers. We compete with publicly listed, national-scale LTL carriers, along with numerous smaller-scale national and regional carriers. In addition, we face competition from truckload carriers, small package carriers, private fleets, final mile and expedited delivery providers, railroads, air freight carriers, third-party logistics providers, and emerging digital freight platforms. Some of these competitors have larger customer bases, greater resources, or longer operating histories in certain markets than we do. We believe our size and scale strategically positions us in our industry.

We believe that our extensive national network, integrated service offerings, advanced technology solutions, and commitment to operational excellence differentiate us in the marketplace. Additionally, we believe we are well positioned to benefit from key industry trends, including the continued growth of e-commerce, increased demand for reliable outsourcing partners, and the rapid adoption of digital solutions by shippers and carriers. We also believe that our ongoing investments in technology, network capacity, and service innovation will enable us to meet the changing needs of our customers and compete effectively in a dynamic industry environment.

See Item 1A. “Risk Factors” for additional information.

Seasonality

Our business is cyclical in nature, as seasonal fluctuations affect volumes, revenues, and earnings. Historically, spring and fall are the busier periods, and the latter part of December through February is the slowest period. Shipment levels, operating costs, earnings, and cash flow can also be affected by timing of merit-based compensation increases, our annual general rate increase, and severe weather.

Human Resources

Our people are at the heart of our success and are the foundation of our strong reputation. As of June 1, 2026, we had approximately 40,000 employees, and our exceptional network shapes our identity, reputation, and the type of business we strive to be. Ultimately, our success depends on the talent, dedication, and well-being of our people — our greatest asset. As we continue to grow, we remain dedicated to continuously recruiting, retaining, nurturing, and providing unwavering support to our team members and making FedEx Freight an inclusive and growth-focused workplace. We also conduct periodic audits of our labor practices to assess compliance with regulatory requirements. We have established the Human Resources and Compensation Committee (the “HRCC”) of our Board of Directors (the “Board”), which reviews and discusses with management our key human resource management strategies and programs.

Our approach to managing our front-line workforce is critical to FedEx Freight’s success. Many of our drivers begin their careers working on the dock and are trained as drivers through an internal commercial driver’s license training program. We believe this approach fosters loyalty, and we have maintained a driver turnover rate average of approximately 10% over the last three fiscal years. Further, these drivers are cross-trained to support dock operations, enabling dynamic staffing that enhances flexibility and utilization. This approach drives efficiency and on-time shipments and reduces idle time, reinforcing a culture centered on speed, service, and reliability.

We are also committed to employee retention and emphasize a culture of promotion from within, which provides employees with clear career paths and opportunities for advancement, fostering a sense of loyalty and long-term commitment. FedEx Freight offers extensive training programs and leadership development initiatives to enable employees to advance within the organization. Job-specific learning opportunities include our Driver Development program, which provides hands-on experience for team members to become professional tractor-trailer drivers, and over 500 drivers were employed from this program in 2026.

We provide competitive compensation and benefits packages, which often include health insurance and retirement plans. In addition to financial incentives, we recognize and reward employees for their contributions to motivate them to continue performing at a high level. This recognition can take many forms, including performance-based bonuses, awards, and public acknowledgment of achievements.

Finally, FedEx Freight invests in creating a positive and supportive work environment. This includes promoting open communication, encouraging teamwork, and providing employees with the resources they need to succeed. We also prioritize employee safety and well-being, implementing comprehensive safety programs and providing access to wellness resources in alignment with our commitment to “Safety Above All.” We recently conducted an employee engagement survey with 85% participation to understand our key cultural drivers, strengths, and opportunities. We believe these combined efforts demonstrate FedEx Freight’s commitment to its employees and contribute to our leading position in employee retention within the freight industry.

Corporate Responsibility

At FedEx Freight, we understand that integrating corporate responsibility principles into our strategic focus is essential. These principles are woven into every component of our culture — from efficient resource management to connected support for all our team members to the highest standards of business conduct. We have cultivated a robust and adaptable network designed to minimize operational disruptions, uphold customer trust, and fortify business resilience for ourselves and our clients.

We have integrated evaluation of climate-related physical and transition risk into our enterprise risk management process by leveraging our extensive expertise in proactively navigating complex situations, such as severe weather events. Based on the risks identified, specific contingency plans and strategies are formulated to minimize potential adverse effects on our business.

As we move forward as an independent entity following the Spin-Off, we will define sustainability goals tailored to our unique North American operational footprint. We plan to publish a corporate responsibility report in calendar year 2027.

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Fleet Efficiency

We rely heavily on fuel for our day-to-day operations. To reduce our environmental impact, we have adopted fuel-saving measures within our fleet, including fleet replacement and adherence to strict tailpipe emissions standards across jurisdictions, in alignment with U.S. Environmental Protection Agency (“EPA”) and California regulations. We are an industry leader in intermodal transportation utilization, which generally has a significantly lower emissions impact compared to traffic over the road.

Efficiency is central to our business model and the foundation of our sustainability efforts today. Our core strength lies in reducing empty miles and optimizing routes — actions that directly lower fuel consumption and greenhouse gas (“GHG”) emissions. By maximizing trailer utilization and continuously refining our network, we improve both environmental impact and operational performance. While the technologies and infrastructure needed to shift heavy goods vehicles are still developing, we are dedicated to piloting alternative fuels and solutions that can help achieve more immediate reductions in emissions.

Regulation

U.S. Transport

Our operations in interstate commerce are primarily regulated by the U.S. Department of Transportation (“DOT”) and the Federal Motor Carrier Safety Administration (“FMCSA”), which retain limited oversight authority over motor carriers. Federal legislation preempts regulation by the states of rates, routes, and services in interstate freight transportation. Like other interstate motor carriers, our operations are subject to certain DOT safety requirements governing interstate operations. In addition, federal and state regulatory bodies have broad powers relating to vehicle weight and dimensions, authorized motor carrier operations, motor carrier registration, driver hours of service, safety and fitness of transportation equipment and drivers, port security, and transportation of hazardous materials and other types of shipments. We are subject to the costs and potential adverse impact of compliance associated with the FMCSA’s Electronic Logging Device (“ELD”) regulations and guidance, including the operation of our fleet and safety management systems on the ELD hardware and software platform. For example, the FMCSA imposes stringent rules regarding driver hours of service and break time. We employ electronic logging to keep track of our drivers’ driving time to better monitor safety and adherence to these rules. In addition, certain shipments may subject us to compliance with cargo-security and transportation regulations issued by the Transportation Security Administration (“TSA”) and U.S. Customs and Border Protection (“CBP”).

International Transport

We operate in the United States, Canada, and Mexico. We offer service to and from Puerto Rico and to the U.S. Virgin Islands via alliances. The DOT regulates international routes and practices. The right of a U.S. carrier to serve foreign points is subject to the DOT’s approval and generally requires a bilateral agreement between the United States and the foreign government. In addition, the carrier must then be granted the permission of such foreign government to provide specific services.

Our customs clearance activities are subject to regulation by CBP and other partner government agencies, like the Food and Drug Administration, that regulate the importation and exportation of specific products. Our operations outside the United States are subject to similar regulation by the regulatory authorities of the applicable foreign jurisdictions, such as the Canada Border Services Agency. For example, in Canada, carriers must obtain licenses issued by provincial transport boards in order to carry goods inter-provincially or to transport goods within any province.

Environmental

We are subject to various federal, state, local, and international environmental laws and regulations that focus on, among other things, the generation, management, and disposal of hazardous waste, materials, and substances. Various laws and regulations also dictate the management of hazardous materials and substances stored, present, or impacting our properties and vehicles, including as related to fuel storage tanks, transportation of certain materials, and activities impacting storm water discharge.

Significant U.S. and international legislative and regulatory efforts limit GHG emissions, including our vehicle engine emissions. Increasingly, state and local governments are also considering GHG regulatory requirements related to energy usage in facilities and for vehicles and other equipment. Compliance with GHG regulations and the associated potential cost is complicated by the fact that various states, countries, and regions are following different approaches to the regulation of climate change. For example, California has historically set its own vehicle emissions standards via EPA Clean Air Act preemption waivers; however, these waivers have been recently curtailed leaving businesses with questions on enforceability.

Other Regulations

As a transportation and logistics provider, we are subject to a variety of other U.S. and foreign laws and regulations relating to matters including, but not limited to, data protection and AI, bribery and corruption, and trade compliance. Violations or non-compliance could result in significant fines or other penalties and/or negatively impact our reputation, business, or results of operations. See Item 1A. “Risk Factors” for additional information.

Available Information

We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, amendments to those reports, proxy and information statements, and other information electronically with the SEC. All of our reports and financial information filed with, or furnished to, the SEC can be obtained, free of charge, on our website at ir.fedexfreight.com or through the SEC’s website

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located at www.sec.gov as soon as reasonably practical after such material is electronically filed with, or furnished to, the SEC. We also maintain a section on our website as a disclosure channel for providing broad, non-exclusionary distribution of information regarding FedEx Freight to the public, and as one means of disclosing non-public information in compliance with our disclosure obligations under Regulation FD. The information contained on our website, however, is not incorporated by reference in, and does not form a part of, this Annual Report.