FedEx Freight Holding Company, Inc. (FDXF) Risk Factors

ITEM 1A. RISK FACTORS

In addition to the information set forth in other sections of this Annual Report, including, but not limited to, Item 1. “Business,” Item 1C. “Cybersecurity,” Item 3. “Legal Proceedings,” and Item 7. “Management’s Discussion and Analysis of Results of Operations and Financial Condition,” you should carefully consider the following factors, which could materially adversely affect our business, results of operations, financial condition, and the price of our common stock. Additional risks not currently known to us or that we currently deem to be immaterial or general risks that apply to all companies operating in North America also may materially adversely affect our business, results of operations, financial condition, and the price of our common stock. Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including, but not limited to:

Risks Relating to Our Business and Industry

•macroeconomic conditions, including inflation, interest rates, supply chain disruptions, geopolitical conflicts, and changes in trade policies (including tariffs);

•customer demand for goods, and shifts in production, inventory, and distribution patterns;

•fuel prices and supply disruptions, together with limitations on our ability to recover such costs through fuel surcharges;

•failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences;

•adverse publicity relating to our or FedEx’s activities and the FedEx brand generally;

•the cost and availability of insurance;

•our ability to meet our medium-term financial performance targets;

•the high degree of competition in our industry;

•extensive and evolving transportation, environmental, safety, labor, tax, data privacy, and other regulations;

•legal proceedings and claims, litigation, governmental inquiries, notices, and investigations;

•labor market conditions, including availability and cost of drivers and other personnel, workforce relations, and potential unionization or labor disruptions;

•our ability to adapt to and implement new and emerging technologies, including AI;

•data breaches or other disruptions to our technology infrastructure;

•global climate change, environmental regulation, and sustainability expectations, including increased costs, regulatory uncertainty, and potential litigation or reputational harm; and

•severe weather events, natural disasters, public health crises, and other disruptions (including terrorism).

Risks Relating to the Spin-Off

•significant tax liabilities that could result from the Spin-Off or related transactions failing to qualify as tax-free for U.S. federal income tax purposes;

•certain restrictions resulting from the Spin-Off on our operations and strategy; and

•our ability to achieve some or all of the anticipated benefits of the Spin-Off.

Risks Relating to Our Common Stock

•the potential for substantial sales of our common stock following the Spin-Off; and

•the impact of certain anti-takeover provisions in our organizational documents and under Delaware law.

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General Risk Factors

•constraints, volatility, or disruption in global capital and credit markets;

•our inability to operate any acquired businesses; and

•the effects of a widespread outbreak of an illness or any other communicable disease or public health crisis.

Risks Relating to Our Business and Industry

Risks Relating to Macroeconomic and Geopolitical Conditions

We are directly affected by the state of the global economy and geopolitical developments, which has affected the demand for our services and could materially adversely affect our business.

While our operations are limited to North America, we are indirectly impacted by broader macroeconomic and international trade policies and risks. The transportation industry is highly cyclical and especially susceptible to trends in economic activity. Our primary business is to transport goods, so our business levels are directly tied to the purchase and production of goods and the rate of global trade growth — key macroeconomic measurements influenced by, among other things, inflation and deflation, international trade policies and relations (including tariffs or the imposition of new tariffs, trade wars, barriers, or restrictions or threats of such actions), supply chain disruptions, interest rates, currency exchange rates, labor costs and unemployment levels, fuel and energy prices, inventory levels, spending patterns (including shifts from goods to services and vice versa), disposable income, debt levels, credit availability, public health crises, political uncertainty, geopolitical tensions or conflicts, and changes to social conditions and regulations. When individuals and companies purchase and produce fewer goods, we transport fewer shipments, and as companies move manufacturing closer to consumer markets and expand the number of distribution centers, we transport shipments shorter distances, which adversely affects our revenue per shipment and results of operations. Certain manufacturers and retailers are also making investments to produce and store goods in closer proximity to supply chains and consumers.

The decline in U.S. imports of consumer goods that started in late 2022, along with slowed global industrial production, has contributed to continued weakened business conditions for the transportation industry leading to lower shipment volumes. Additionally, changes in U.S. and international trade policy have in the past and could in the future lead to further weakened business conditions for the transportation industry. We also have experienced, and may continue to experience, a decline in demand for our transportation services as inflation and elevated interest rates negatively affect consumer and business spending. We expect inflation and elevated interest rates to continue to negatively affect our results of operations for the remainder of calendar year 2026.

Additional changes in international relations and trade policies, including with respect to tariffs, could significantly reduce the volume of goods transported and increase our costs, which could materially adversely affect our results of operations and financial condition.

The U.S. government has taken certain actions that have negatively affected U.S. trade, including imposing and threatening to impose tariffs on many goods imported into the United States (including certain goods from Canada and Mexico). Additionally, many foreign governments (including Canada and Mexico) have imposed, and others have threatened to impose, tariffs on certain goods exported from the United States. These actions have contributed to weakness in the global economy and in the transportation industry which has led to lower shipments, adversely affecting our results of operations. These conditions may continue in the future. Increased tariffs may lead to lower levels of trade or heightened political tension. Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for transported goods, potentially reducing customer demand for our services.

In addition, negotiations among the United States, Canada, and Mexico on matters related to the United States-Mexico-Canada Agreement (“USMCA”), which governs trade among such countries, are ongoing. It remains difficult to predict the impact of any change in the USMCA on the economy, including the transportation industry, but given the amount of North American trade that moves by truck, any new or revised restrictions on trade could have a significant impact on supply and demand in the LTL freight transportation industry. Such changes could materially adversely affect our results of operations and financial condition.

Our business and results of operations are affected by the price and availability of fuel, as well as our ability to collect fuel surcharges.

We must purchase large quantities of fuel to operate our vehicles, and the price and availability of fuel is beyond our control and can be highly volatile. In addition, our purchased transportation expense is affected by fuel costs. To date, we have been mostly successful in mitigating over time the effect of higher fuel costs through our indexed fuel surcharges, which help offset the negative effect of increased fuel prices. If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or other reasons, fuel costs could adversely affect our operating results. We have no derivative financial instruments to reduce our exposure to fuel price fluctuations, and we currently have no plans to use derivative financial instruments for this purpose in the future.

High fuel surcharges could reduce customer demand for our services. In addition, disruptions in the supply of fuel could have a negative effect on our ability to operate our business. The following factors may affect fuel supply and could result in shortages and price increases in the future: political disruptions or geopolitical conflicts involving oil-producing countries; economic sanctions imposed against oil-producing countries or specific industry participants; changes in governmental policy concerning fuel production; transportation taxes; weather-related events; natural disasters; changes in refining capacity; sustainability concerns or regulations;

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cyberattacks; and public and investor sentiment. Fuel shortages and price increases could have a material adverse effect on our business, results of operations, and financial condition.

Risks Relating to Operations and Strategies

Failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences could materially adversely affect our business, results of operations, and financial condition.

Our long-term business strategy depends on several key initiatives including, but not limited to, our ability to grow our key customer verticals, improve the experience of our customers, and effectively implement new technologies. We are making significant investments and incurring operating expenses in connection with these initiatives, and may not be able to derive the expected benefits from them.

In developing our business strategy, we make certain assumptions including, but not limited to, those related to customer demand and freight volume growth, competition, and the North American and global economies, and actual market, economic, and other conditions may be different from our assumptions. As technology, customer behavior, and market conditions continue to evolve, it is important that we maintain the relevance of our brand and service offerings to our customers. If we are not able to successfully implement our business strategy and effectively respond to changes in technology, customer preferences, and market dynamics, our business, results of operations, and financial condition will suffer.

Adverse publicity relating to our own activities or FedEx’s activities could materially adversely affect our reputation and reduce the value of our goodwill and brand.

We and FedEx have a strong reputation among our respective customers and team members and the general public for high standards of corporate responsibility, governance, and ethics. We expect that our license to use the FedEx brand name pursuant to the Trademark License Agreement and our corporate reputation will be powerful tools for sales, marketing, and recruitment. See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional details regarding the Trademark License Agreement and “We do not own the FedEx trademark or logo or associated purple and orange trade dress and certain intellectual property retained by FedEx, the protection of which is largely out of our control, and any elimination of our rights to use specified trademarks and intellectual property granted to us under the Trademark License Agreement and the Intellectual Property Cross-License Agreement could materially adversely affect our reputation, business, and results of operations” below.

Adverse publicity or sensationalism across media channels (whether or not justified) relating to activities including, but not limited to, those by our or FedEx’s team members or others with whom we or FedEx do business, could tarnish our reputation and reduce the value of our brand and goodwill, such as: labor relations, legal matters, cybersecurity incidents, incidents involving vehicles or facilities, cargo theft, sustainability issues, and similar matters. Further, we may have little or no control over some of these activities, such as the activities that are carried out by FedEx or others with which we or FedEx do business.

With the increase in the use of AI and social media outlets, adverse publicity, whether warranted or not, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond. Damage to our reputation and loss of brand equity could reduce demand for our services and/or create difficulties in retaining and recruiting employee talent, and may require additional resources to rebuild our reputation and restore the value of our brand and goodwill.

We are self-insured for certain costs associated with our operations, and insurance and claims expenses may increase, which could materially adversely affect our profitability and financial condition.

We maintain insurance coverage for covered losses that entitle us, subject to policy terms and limits, to coverage above our retention amount for workers’ compensation claims, vehicle accidents, property and cargo loss, and general business liabilities for occurrences on or after June 1, 2026. Occurrences prior to the Spin-Off are already covered by FedEx policies under which we may make claims pursuant to the Separation and Distribution Agreement between us and FedEx entered into in connection with the Spin-Off (the “Separation and Distribution Agreement”). See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional details regarding the Separation and Distribution Agreement. Our accruals are primarily based on estimated costs determined by actuarial methods. Estimated costs include consideration of a variety of factors and related assumptions, some or all of which may prove to be incorrect. Material increases in the magnitude of claims due to recent litigation outcomes, changes to healthcare costs, accident frequency and severity, insurance retention levels, judgment and settlement amounts, associated legal expenses, and other factors could result in unfavorable differences between actual costs and our reserve estimates. As a result, our insurance and claims costs could increase materially in the future.

As a supplement to our insurance coverage, we maintain coverage with excess insurance carriers in certain instances for potential losses related to occurrences following the Spin-Off that exceed the amounts of our foundational insurance coverage. However, we can provide no assurance that such coverage will be adequate to protect us from costs incurred with certain events. For example, the commercial trucking industry has experienced a wave of blockbuster or so-called “nuclear” verdicts, including some instances in which juries have awarded hundreds of millions of dollars to those injured in accidents and their families. As a result, several insurance companies have completely stopped offering coverage to trucking companies for automobile liability claims, significantly reduced the amount of coverage they offer, or significantly raised premiums. This trend could adversely affect our ability to obtain suitable insurance coverage, significantly increase our cost of obtaining such coverage, or subject us to significant liabilities for which no insurance is in place.

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Given the current claims environment, the amount of coverage available from excess insurance carriers is decreasing, the premiums for this excess coverage are increasing significantly, and excess insurance carriers are challenging insurance claims more frequently, which could further exacerbate our ability to obtain adequate coverage. Our results of operations and financial condition could be adversely affected if our costs or losses significantly exceed our aggregate coverage limits, we are unable to obtain excess insurance coverage in amounts we deem sufficient, our insurance carriers fail to pay on our insurance claims, or we experience a claim for which coverage is not provided.

We may not be able to achieve our medium-term financial performance targets.

On April 8, 2026, we announced a comprehensive multi-year financial framework with medium-term financial performance targets. Our ability to achieve these goals is dependent on a number of factors, including the other risk factors described in this Annual Report. We may fail to achieve our medium-term financial performance targets if we are unsuccessful in implementing our strategies, our estimates or assumptions change, or for any other reason. If we are not able to achieve these targets, there could be an adverse effect on our results of operations and financial condition, and the price of our common stock may be negatively affected.

Failure of third-party service providers to perform as expected, or disruptions in our relationships with those third parties or their provision of services to us, could materially adversely affect our business.

We engage third-party service providers to perform certain functions that are integral to our business, including the provision of information technology infrastructure, application development, maintenance and support, and end-user support services. In addition, we have entered into go-forward arm’s-length agreements with FedEx pursuant to which FedEx will provide certain services to us and vice versa following the Spin-Off. See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional details regarding such agreements with FedEx. There can be no assurance that such third parties will adhere to contractual service performance or compliance requirements, perform their assignments in a satisfactory manner, or comply with our safety rules in an appropriate manner, and such third parties may suffer disruptions to their systems, labor groups, or supply chains that could adversely affect their services. Such failures could compromise our ability to fulfill our commitments to our customers, comply with applicable regulations, or otherwise meet our customers’ expectations. We may also have disagreements with such third parties, and related contracts may be terminated or may not be extended or renewed. Additionally, from time to time certain service providers have engaged, and some may in the future engage, in fraudulent activities in the course of their business relationships with us. Any of the foregoing could materially adversely affect our business, results of operations, and financial condition.

We operate in a rapidly evolving and highly competitive industry and we may be affected by downward pricing pressures and other competitive factors, along with a decrease in our customers’ use of our services, which could materially adversely affect our results of operations and financial condition.

The freight transportation market is highly competitive and sensitive to price and service levels. Continued transportation industry consolidation may further increase competition. We also face competition from outside the LTL freight transportation industry, including from regional transportation providers that operate smaller and less capital-intensive transportation networks and startup companies. Some smaller competitors may not be fully compliant with applicable regulations, which may allow such competitors to achieve additional driver productivity or other advantages. Capacity levels in the broader freight transportation industry also influence demand and pricing for our services. In addition, some retailers are developing and implementing in-house transportation capabilities. For example, Amazon has announced the offering of its internal freight and other transportation and logistics capabilities more broadly to third parties.

Customers may shift to other LTL providers or modes of transportation for a variety of reasons, including in response to capacity, service, and pricing issues. Some of our competitors may have actual or perceived competitive advantages. Our current competitors or potential future competitors could offer a broader range of services or better service levels, more effectively bundle their services, offer services at lower prices, or take greater advantage of emerging technologies such as AI and autonomous transportation. Certain competitors may also be willing to operate at little or no margin to gain market share. The existence of such a pricing environment could limit our ability to maintain or increase our prices. Advancements in technology may also necessitate that we increase investments in order to remain competitive, and our customers may not be willing to accept higher rates to cover the cost of these investments.

Risks Relating to Regulatory and Legal Matters

We have been and may be subject to new and revised regulations related to the transportation industry, which could increase our compliance costs and materially adversely affect our business.

We are subject to laws, regulations, and requirements promulgated by the DOT, the FMCSA, the U.S. Department of Homeland Security, CBP, Canada Border Services Agency, and various other international, domestic, state, and local agencies and port authorities. These authorities have broad powers over matters relating to authorized motor carrier operations, as well as motor carrier registration, driver hours of service, safety and fitness of transportation equipment and drivers, transportation of hazardous materials, and other matters. The trucking industry is also subject to regulatory and legislative changes from a variety of other governmental authorities, which address matters such as increasingly stringent environmental regulations, occupational safety and health regulations, limits or restrictions on vehicle weight and size and types of shipments transported, port security, driver hours of service, driver meal and rest breaks, and drug and alcohol testing. We are subject to the costs and potential adverse effect of compliance with ELD regulations and guidance, including the operation of our fleet and safety management systems on the ELD hardware and software platform. In addition, certain shipments may subject us to compliance with cargo-security and transportation regulations issued by the TSA and CBP. Legal and regulatory requirements and changes in these requirements or guidance, together with the growing

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compliance risks presented by increased differences between applicable federal and state laws and regulations, may adversely affect our business or the economics of the industry by requiring changes in operating practices that could influence the demand for and increase the costs of providing transportation services. See Item 1. “Business — Regulation” for additional discussion regarding certain applicable regulations.

Our right to serve foreign points is subject to the approval of the DOT and generally requires a bilateral agreement between the U.S. and foreign governments. In addition, we must obtain the permission of foreign governments to provide specific services. 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. Our operations outside of the United States are also subject to regulations that restrict, make difficult, and sometimes prohibit the ability of foreign-owned companies such as us to compete effectively in parts of the international domestic transportation and logistics market. If we are unable to maintain our Free and Secure Trade (“FAST”), U.S. Customs Trade Partnership Against Terrorism (“C-TPAT”), and Partners in Protection (“PIP”) certification statuses, we may have significant border delays, which could cause our cross-border operations to be less efficient than those of competitor carriers that obtain or continue to maintain FAST, C-TPAT, and PIP certifications. Regulatory or executive actions affecting global transportation rights or a failure to obtain or maintain transportation rights in important international markets could impair our ability to operate our business. Further, our ability to obtain or maintain transportation rights internationally may be adversely affected by changes in international trade policies and relations, and any lapses in government operations may result in, among other things, disruptions in the ability of government agencies to grant required regulatory approvals.

We may also become subject to new or more restrictive regulations. Compliance with these laws and regulations can be onerous and expensive and new and changing laws and regulations can require changes that adversely affect our business. New and changing laws and regulations can also create uncertainty about how such laws and regulations will be interpreted and applied. There can be no assurance that our employees, contractors, or agents will not violate such laws and regulations. If we are found to have violated laws and regulations, it could increase our compliance costs and materially adversely affect our business.

Our business is subject to complex data privacy, data security, cybersecurity, and AI laws and regulations that may significantly increase our costs and adversely affect our business.

Laws and regulations regarding data privacy, data security, cybersecurity, and AI in North America continue to be updated and expanded. Enforcement actions relating to these areas continue to increase and be an area of focus. The failure to comply with applicable data protection laws, regulations, or cybersecurity or AI regulations may expose us or our third-party service providers to litigation, fines, sanctions, or other penalties. Compliance with applicable regulations in the various states and international jurisdictions in which we do business may present material obligations and risks to our business, including significantly expanded compliance burdens, costs, and enforcement risks; extensive system or operational changes; or increased cost and/or reduced attractiveness of the services we offer. All of these evolving compliance and operational requirements, as well as the uncertain interpretation and enforcement of laws, impose significant costs and regulatory risks that are likely to increase over time.

We are subject to legal proceedings and claims, litigation, governmental inquiries, notices, and investigations, which could result in significant expense and materially adversely affect our business, results of operations, and financial condition.

The nature of our business exposes us to the potential for various legal proceedings and claims regarding a variety of issues, including accidents involving our trucks and employees and the trucks and employees of third-party contractors, workers’ compensation, federal and state labor and employment law claims, securities claims, privacy claims, contract claims, personal injury, property damage, cargo claims, safety and contract compliance, environmental liability, and other matters. These proceedings may be time-consuming, expensive, and disruptive to normal business operations, and may include collective and/or class action allegations. Additionally, we may from time to time be subject to potential governmental inquiries, notices, or investigations. The defense, settlement, or resolution of such matters could result in significant expense that may not be covered in whole or in part by insurance.

The FMCSA’s Compliance, Safety, Accountability initiative could adversely affect our ability to hire qualified drivers, meet our growth projections, and maintain our customer relationships, any of which could materially adversely affect our business and results of operations.

The FMCSA’s Compliance, Safety, Accountability initiative (“CSA”) is a data-driven safety compliance and enforcement program designed to improve safety and prevent commercial motor vehicle crashes, injuries, and fatalities. CSA consists of three core components: the Safety Measurement System (“SMS”); interventions; and a Safety Fitness Determination rating system to determine the safety fitness of motor carriers. The SMS uses data from roadside inspections and crash reports from the last two years and data from investigations to identify carriers with safety performance and compliance problems for interventions. The data is updated once a month and organized into seven Behavior Analysis and Safety Improvement Categories (“BASIC”). The SMS groups carriers by BASIC with other carriers that have a similar number of safety events (e.g., crashes, inspections, or violations) and then ranks carriers and assigns a percentile to prioritize them for interventions. Our SMS/BASIC and other safety-related information are dependent upon our safety and compliance experience, which could change at any time. Certain safety performance information, including information derived from SMS, is publicly available. Adverse safety performance metrics, regulatory findings, safety ratings, or other unfavorable safety-related information could negatively affect our reputation and customer relationships, reduce demand for our services, and adversely affect our business and results of operations.

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Risks Relating to Employee Matters and Human Resource Management

Labor-related disruptions and potential changes in labor laws could disrupt our operations and materially adversely affect our business and results of operations.

Our business is labor intensive in nature, employing numerous workers across multiple job classifications. Labor-related disputes and disruptions, such as strikes and work stoppages by our employees, employees of our service providers, or employees of our customers could depress volumes or our ability to service customers. Labor unions have in the past attempted to organize employees at FedEx Freight and could attempt to do so again. In June 2026, the U.S. House of Representatives passed the Faster Labor Contracts Act which, if enacted, would alter the process for negotiating initial collective bargaining agreements following union organization efforts. More broadly, Congress may consider additional labor legislation that could strengthen employee organizing rights, facilitate union representation, or otherwise increase labor-related costs and operational risks. In addition, the National Labor Relations Board could take actions that make it easier for our employees, as well as vendors, service providers, and supplier workforces, to organize. In the event of reclassification of our FedEx Custom Critical independent service providers or their drivers as employees, we could be exposed to various liabilities and additional costs under federal, state, and local tax laws.

Our failure to attract and retain employee talent, meet our purchased transportation needs, or maintain our company culture, as well as increases in labor and purchased transportation costs, could materially adversely affect our business, service levels, and results of operations.

Our success depends upon the efforts and abilities of our high-quality management team and employees, many of whom are longstanding FedEx Freight team members. Difficulties in motivating, rewarding, recruiting, and retaining employee talent, including members of senior management and successors to senior management; failure to protect members of senior management from security threats; the unexpected loss of long-term senior management resulting in the depletion of our institutional knowledge; and/or our inability to successfully transition key management roles could materially adversely affect our business and results of operations.

Increased turnover rates could lead to heightened recruiting, training, and retention costs. Additionally, our company culture is important to providing high-quality customer service and having a productive workforce and could be adversely affected by our evolving operations and other factors. If we fail to maintain the strength of our company culture, our competitive ability and our business may be harmed.

There is significant competition for qualified drivers and other operational positions within the trucking industry and attracting and retaining qualified employees for such positions has become more challenging due to a decreasing pool of qualified candidates and/or high turnover rates. Changing workforce demographics, hours of service rules, competition from other transportation companies and industries for employees, the availability and affordability of driver training schools and other required education, changing industry regulations, and demand in the labor market have contributed to the reduction in the number of eligible candidates for these positions, and may continue to do so in the future.

Our business is labor intensive, and our ability to meet our labor and purchased transportation needs while controlling related costs is generally subject to numerous external factors, including the availability of qualified persons in the markets where we operate, wage rates and other benefits, adoption of new or revised employment and labor laws and regulations or government programs, and interest in working for FedEx Freight.

Our inability to effectively meet our labor and purchased transportation needs can increase our costs, hinder our ability to execute our business strategy, negatively affect service levels, and adversely affect our business and results of operations.

We may experience an increase in costs, the volatility of costs and funding requirements, and new legal mandates for employee benefits, especially pension and healthcare benefits, which could materially adversely affect our results of operations.

We provide retirement benefits for most of our employees through FedEx Freight-sponsored programs. We assumed certain liabilities from FedEx in connection with the Spin-Off, including certain liabilities for pension, healthcare, and life insurance benefits previously provided to our current employees unrelated to our core business. These programs include defined benefit pension and defined contribution plans. The costs of providing pension plans are dependent on numerous assumptions, such as discount rates, expected long-term investment returns on plan assets, future salary increases, employee turnover, mortality, and retirement ages. Changes in actuarial assumptions and differences between the assumptions and actual values, as well as significant declines in the value of investments that fund our pension plans, increases in healthcare costs, or other adverse developments, could increase benefits-related expenses and liabilities. We may rely on estimates and assumptions which are difficult to make. Actual developments may differ from estimates and assumptions, thereby resulting in an increase or decrease in our actual obligations for these liabilities.

Risks Relating to Technology, Data, and Intellectual Property

We may fail to adapt to and implement new technologies, including technologies implemented by our competitors, which could impair our competitive position and materially adversely affect our business and results of operations.

In recent years, our industry has been characterized by rapid changes in technology. AI and other emerging technologies, including autonomous transportation, have the potential to alter the delivery of services and business operations across our industry. Our use of AI or other emerging technologies may be, or may be alleged to be, deficient, inaccurate, biased, or in violation of intellectual property rights or privacy-related rights of third parties. AI also presents emerging ethical issues and if our use of AI becomes controversial, we

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may experience brand or reputational harm, competitive harm, or legal liability. The rapid evolution of AI, including potential government regulation of AI, may require us to dedicate significant resources to develop, test, implement, and maintain our AI solutions. We also rely heavily on information technology systems. Our information technology systems are complex and require ongoing investments and enhancements to meet both internal requirements and the requirements of our customers.

The process of continuous enhancement may lead to significant ongoing software development costs. We will also continue using certain FedEx systems for a limited time. For example, pursuant to the Transition Services Agreement, FedEx Freight will utilize, for up to two years following the Spin-Off, applications provided by FedEx that support functions including order creation, as well as the network technology operations and support technologies required for those applications. Furthermore, while we may further integrate digital technologies into our operations, these integration efforts and the engagement of additional technology service providers and systems in our operations could increase our exposure to the aforementioned risks. If we are unable to invest in and enhance or modernize our technology systems in a timely manner or at a reasonable cost; if we fail to accurately determine the needs of our customers or trends in the transportation industry; if we are unable to train our employees to operate the new, enhanced, or modernized systems; if we are unable to access FedEx systems we plan to utilize following the Spin-Off; if we fail to effectively implement our new information technology infrastructure in a timely manner; or if we fail to achieve the benefits that we anticipate from any new technology or new or modernized system, our business and results of operations could be materially adversely affected.

In addition, the timing of when we have to adopt new technologies may be affected by changes in the political or regulatory environment, which could further increase our investment costs and operating complexity and limit our ability to offer such technologies to our customers in the jurisdictions in which we operate. Moreover, the success of our approach to technology innovation also depends on market acceptance of our solutions and other factors, including our ability to deploy funds and resources, achieve the right balance of strategic investments in existing or developing technology and innovation, detect and remedy defects in enhanced or new technology, and adequately anticipate and respond to challenges.

A significant data breach or other disruption to our technology infrastructure could materially adversely affect our business and result in the loss of critical, sensitive, or confidential information.

Our ability to attract and retain customers, efficiently operate our business, and compete effectively depends in part on the sophistication, security, and reliability of our technology infrastructure, including our ability to provide features of service that are important to our customers, to protect our confidential business information and the information provided by our customers (including personal information), and to maintain customer confidence in our ability to protect our systems and to provide services consistent with their expectations. We face significant and evolving risks from cyberattacks, data breaches, and operational disruptions, which may be random or targeted and can originate from a variety of sources, including external actors, malicious insiders, and third-party service providers. These risks are heightened by the increasing number, intensity, and sophistication of attempted attacks globally, as well as the growing reliance on connected information technology systems to store and transmit sensitive data. FedEx and our third-party service providers have experienced, and we and our third-party service providers may experience in the future, breaches or disruptions of our technology infrastructure, which could result in unauthorized access to, or loss of, sensitive or confidential information regarding our operations, customers, employees, or suppliers, including personal information. We have also faced, and may continue to face, attempts to gain access to customer accounts. We also maintain integrations with customers and key business partners and have faced, and may continue to face, attempts to gain access to our systems and environments through such entry points. Additionally, risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our enterprise automation platforms, data leakage, cyber-fraud, and human error pose a direct threat to our products, services, systems, and data, and could result in unauthorized access to, or block legitimate access to, sensitive or confidential data. Any incidents involving the foregoing or similar matters could materially adversely affect our business and result in significant costs.

We depend on and interact with technology and systems of third parties, including customers, cloud service providers, Software as a Service providers, and other vendors. Certain third parties are involved in critical technology services and data processing. These third parties are subject to similar cybersecurity and operational risks, and their failures, breaches, or human errors could compromise our data or disrupt our operations, despite having security processes, protocols, and standards in place. The security measures we and our third-party service providers have in place may not be sufficient to prevent all breaches or disruptions.

Detecting, investigating, and remediating cybersecurity incidents is complex and may be delayed by incomplete or insufficiently detailed logging, the sophistication of threat actors, and the size and complexity of our information systems. The full scope and impact of an incident may not be immediately apparent, and remediation efforts may be prolonged or repeated before the incident is fully contained. In some cases, breaches may not be discovered for a significant period of time after they occur, and harm may spread internally or to customers, vendors, or other third parties before containment. Patches for certain vulnerabilities may not exist and, even where patches or other risk-mitigating activities are available, the development of patches or execution of risk-mitigating actions may not occur before an underlying vulnerability is exploited and results in the disruption of our operations or compromise of our information systems or data. A significant number of our employees as well as customers and others with whom we do business work remotely or in hybrid models, which may heighten these risks. Our investments in technology security initiatives, information technology risk management, business continuity, and disaster recovery plans, including the retirement and replacement of end-of-life systems, are costly, require ongoing monitoring and updating, and may not be sufficient to prevent all incidents, particularly as threats evolve and new technologies such as AI and machine learning introduce additional challenges. A significant cybersecurity incident could materially adversely affect our business, results of operations, and financial condition.

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We do not own the FedEx trademark or logo or associated purple and orange trade dress and certain intellectual property retained by FedEx, the protection of which is largely out of our control, and any elimination of our rights to use specified trademarks and intellectual property granted to us under the Trademark License Agreement and the Intellectual Property Cross-License Agreement could materially adversely affect our reputation, business, and results of operations.

We do not own the FedEx trademark or logo or associated purple and orange trade dress and have entered into the Trademark License Agreement with Federal Express, pursuant to which Federal Express granted us a license to use the FedEx Freight trademark and logo in connection with certain of our products, solutions, and services, as well as the right to use the FedEx Freight global brand in connection with certain legal entity names within our corporate structure and trade names. Federal Express owns and controls the FedEx brand, and the integrity and strength of the FedEx brand will depend in large part on the efforts and businesses of Federal Express and FedEx and other licensees of the FedEx brand and how the brand is used, promoted, and protected by them, which will be largely outside of our control. We may be dependent to a certain extent on Federal Express to prosecute, maintain, defend, and enforce the trademarks licensed under the Trademark License Agreement.

Termination of the Trademark License Agreement would eliminate our rights to use the specified trademarks granted to us under the Trademark License Agreement and may result in our having to negotiate a new or reinstated agreement with less favorable terms or cause us to lose our rights under the Trademark License Agreement, which would require us to change our corporate name and undergo significant rebranding efforts. These rebranding efforts may require significant resources and expenses and may compromise our ability to attract and retain customers and employees and/or negatively affect our reputation, any of which could materially adversely affect our business and results of operations.

Our rights to use certain intellectual property retained by FedEx were granted to us under the Intellectual Property Cross-License Agreement. We may be dependent to a certain extent on FedEx to prosecute, maintain, defend, and enforce certain of the intellectual property licensed to us by FedEx. If FedEx chooses not to enforce the intellectual property licensed to us, we may not be able to prevent competitors from making, using, and selling products, solutions, and services that potentially infringe on such intellectual property.

See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional details regarding the Trademark License Agreement and the Intellectual Property Cross-License Agreement.

Risks Relating to the Environment, Climate, and Weather and Other Disasters

We may be affected by global climate change or by legal, regulatory, or market scrutiny and changes with respect to sustainability and environmental matters, which could increase our costs and materially adversely affect our business and results of operations.

Concern over sustainability and the environment, and particularly climate change, including the effects of global warming, has led to significant U.S. and international governmental efforts to enact sustainability- and environmental-related regulatory and reporting requirements and limitations on GHG emissions, including those associated with our vehicle engines and facilities. Increased regulation and reporting obligations regarding GHG emissions, especially vehicle engine emissions, could impose substantial taxes, fees, and other costs on us. These include an increase in the cost of the fuel and other energy we purchase, investments required to obtain electricity capacity and capital, and impairment costs associated with updating or replacing our vehicles or infrastructure prematurely. Compliance with such regulations and the associated potential costs are complicated by the fact that various countries and states are following different and continuously evolving approaches to the regulation and reporting of such matters. For example, in February 2026, the EPA rescinded its 2009 Endangerment Finding, which provided the regulatory predicate for the EPA to issue GHG emission standards. At the same time, the EPA repealed federal GHG emission standards for new light-, medium-, and heavy-duty vehicles and engines. Additionally, while California has historically set its own vehicle emissions standards via EPA Clean Air Act preemption waivers, these waivers have been recently challenged and curtailed by industry and the federal government, which introduces long-term compliance uncertainty due to continued legal changes.

Until the timing, scope, extent, and enforceability of these and other regulations becomes known, we cannot predict their effect on our cost structure or our operating results, but such regulations could materially adversely affect our business and results of operations. See Item 1. “Business — Regulation — Environmental” for additional discussion regarding these regulations.

Further, to the extent we share information about our sustainability practices, we could be criticized for the accuracy, adequacy, or completeness of such disclosures. There is no assurance that we will achieve any of the goals or that our initiatives described in such disclosures will achieve their intended outcome, and our ability to implement such sustainability-related initiatives or achieve sustainability-related goals will be dependent on external factors outside our control.

We also may experience backlash from customers, government entities, advocacy groups, employees, or other stakeholders who disagree with our actual or perceived positions or with our lack of position on social, environmental, governance, political, public policy, economic, geopolitical, or other sensitive issues, as well as increased awareness and adverse publicity in the marketplace about the sustainability practices of companies in the transportation industry generally. Certain perceptions about these matters could harm our brand and reputation, our employees’ engagement and retention, and the willingness of our customers and partners to do business with us. Advocates (as well as opponents) to sustainability-related matters are increasingly engaging in a range of activism, including media campaigns and litigation, to advance their perspectives. For example, we could be subject to climate litigation or regulatory enforcement actions as groups, individuals, and governmental authorities affected by climate change seek to recover climate-related damages from

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entities they perceive as being partially responsible for climate change. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely affect our reputation.

We have in the past and may in the future be affected by harsh weather conditions and other disasters (including terrorist activities), and we may not be able to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance, which could materially adversely affect our business and results of operations.

Our operations are exposed to adverse weather conditions and localized risks from natural or man-made disasters such as earthquakes, volcanoes, wildfires, hurricanes, tornadoes, wind gusts, floods, severe winter weather, heat waves, extended droughts, conflicts or unrest, terrorist or other physical attacks, or other disturbances, actual or threatened. These conditions can adversely affect the business or financial condition of our Company and our customers. Additionally, shifts in weather patterns caused by climate change could increase the frequency, severity, or duration of certain adverse weather conditions. Prolonged interruptions or disruptions have and in the future could materially adversely affect our business and results of operations. Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could materially adversely affect the demand for our services and our ability to timely deliver goods.

In addition, transportation infrastructure has been in the past, and could in the future be, the target of terrorist activities. Governments in countries in which we operate have adopted, and could in the future adopt, stricter security requirements that increase operating costs and adversely affect our operations. Moreover, a terrorist attack directed at us or on transportation infrastructure on which we rely could disrupt our operations, adversely affect demand for our services, and materially adversely affect our business, results of operations, and financial condition.

Risks Relating to the Spin-Off

If there is a determination that the Spin-Off, together with certain related transactions, was taxable for U.S. federal income tax purposes, then FedEx and its stockholders could incur significant U.S. federal income tax liabilities, and we could also incur significant liabilities.

FedEx received a legal opinion and a private letter ruling (the “Private Letter Ruling”) from the Internal Revenue Service (“IRS”) that the Spin-Off, together with certain related transactions, qualified for the non-recognition of income, gain, and loss under Section 355 and related provisions of the Internal Revenue Code (the “Code”). The IRS could determine on audit that the Spin-Off or certain related transactions were taxable for U.S. federal income tax purposes if it determines that any of the facts, assumptions, representations, statements, and undertakings upon which the Private Letter Ruling or the legal opinion were based are incorrect or have been violated or if it disagrees with the conclusions in the legal opinion. Accordingly, notwithstanding FedEx’s receipt of the Private Letter Ruling and the legal opinion, there can be no assurance that the IRS will not assert that the Spin-Off or certain related transactions did not qualify for non-recognition treatment for U.S. federal income tax purposes, or that a court would not sustain such a challenge.

If the Spin-Off is determined to be taxable for U.S. federal income tax purposes, FedEx and/or its stockholders could incur significant U.S. federal income tax liabilities, and FedEx Freight could also incur significant liabilities.

In addition, under the Tax Matters Agreement entered into between FedEx Freight and FedEx on May 31, 2026 (the “Tax Matters Agreement”), FedEx Freight is generally responsible for any taxes on FedEx that arise from the failure of the Spin-Off, together with certain related transactions, to qualify for tax-free treatment under Section 355 and certain other relevant provisions of the Code to the extent that the failure to so qualify is attributable to actions, events, or transactions relating to FedEx Freight’s stock, assets, or business, or a breach of the relevant representations or covenants made by FedEx Freight under the Tax Matters Agreement, including in each case those provided in connection with the Private Letter Ruling or the legal opinion.

We have agreed to numerous restrictions to preserve the non-recognition tax treatment of the Spin-Off and certain related transactions, which may reduce our strategic and operating flexibility.

We have agreed in the Tax Matters Agreement to certain covenants and indemnification obligations that address compliance with Section 355 and related provisions of the Code, as well as state, local, and foreign tax law. These covenants include certain restrictions on our activity for a period of two years following the Spin-Off. Specifically, we are subject to certain restrictions that are intended to preserve the generally tax-free status of the Spin-Off and certain related transactions for U.S. federal income tax purposes, including restrictions on our ability to enter into acquisition, merger, liquidation, sale, and stock redemption transactions with respect to our stock or assets. Furthermore, we are subject to specific restrictions on discontinuing the active conduct of our trade or business, the issuance or sale of stock or other securities, certain internal restructurings, and sales of assets outside the ordinary course of business. These covenants and indemnification obligations may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that might otherwise be advantageous for our business, and might discourage or delay a strategic transaction that we or our stockholders may consider favorable.

The non-recurring and recurring costs of the Spin-Off, including those related to FedEx’s provision of transition services, may be greater than we expected and continue to be incurred for longer than we expect.

Following the Spin-Off we expect to incur non-recurring costs associated with the continued establishment of FedEx Freight as a standalone public company, including transaction costs related to rebranding, employee-related costs such as recruitment and relocation expenses, and costs to establish certain standalone functions and other transitional costs, including the implementation of information technology applications and infrastructure to support certain business functions. As a standalone public company, we also

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expect to incur recurring costs required to operate new functions as a public company, including executive leadership compensation, accounting and financial reporting, compliance and regulatory, human resources, information technology, marketing and communications, insurance, and other operating costs. The costs of the separation incurred after the Spin-Off may be significantly greater than anticipated. Additionally, if we are dependent on FedEx for transition services for a longer period of time than is currently expected our results of operations could be materially adversely affected.

We may be unable to achieve some or all of the anticipated benefits of the Spin-Off, or those benefits may be delayed.

We may be unable to achieve the full strategic and financial benefits (which are based on a number of assumptions, some or all of which may prove to be incorrect) expected to result from the Spin-Off, or such benefits may be delayed or not realized at all. Such expected benefits include, among others: providing greater flexibility to pursue innovation, capture profitable growth opportunities, adapt to changing customer needs, and permitting us to deploy capital in a manner that is optimized for our own strategy and business needs. We may be unable to achieve some or all of the anticipated benefits as an independent company in the time we expect, if at all, for a variety of reasons, including: (i) compliance with the requirements of being an independent, publicly traded company, which will require significant amounts of our management’s time and effort, and may divert management’s attention from operating and growing our business; (ii) costs and expenses related to the Spin-Off, which may be higher than currently expected; (iii) failure to retain existing business and operational relationships, including with customers, suppliers, employees, and other counterparties; (iv) failure to address employee issues so as to promote retention and motivation and maintain efficient and effective labor and employee relations; (v) increased susceptibility to market fluctuations, actions by activist stockholders, and other adverse events than if we were still a part of FedEx; (vi) less diversification of our business than FedEx’s prior to the Spin-Off; and (vii) potential negative reactions from investors and other external stakeholders. If we fail to achieve some or all of the anticipated benefits as an independent company, or do not achieve them in the expected timeframe, our business and results of operations could be materially adversely affected.

The terms we received in our agreements with FedEx in connection with the Spin-Off could be less beneficial than the terms we may have otherwise received from unaffiliated third parties.

The agreements we entered into with FedEx in connection with the Spin-Off were negotiated prior to the Spin-Off, at a time when our business was still operated by FedEx, and we did not have an independent board of directors or a management team independent of FedEx representing our interests. As a result of these factors, it is possible that we might have been able to achieve more favorable terms if the circumstances differed. See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for additional details regarding these agreements.

We could experience temporary business interruptions, and we may not be adequately prepared to meet the requirements of an independent, publicly traded company on a timely or cost-effective basis.

The services that FedEx is providing to us pursuant to the agreements we entered into in connection with the Spin-Off do not include every service that we have received from FedEx in the past and may not fully capture the benefits that we previously enjoyed as a result of being integrated with FedEx. Following the termination of the Transition Services Agreement, we will need to provide internally or obtain from unaffiliated third parties the services we no longer receive from FedEx. If we do not replace these services successfully, we may not be able to operate our business effectively, which could materially adversely affect our results of operations. These services may also be more expensive to implement, or less efficient or effective, than the services FedEx is providing during the term of the Transition Services Agreement.

In addition, following the Spin-Off, we are directly subject to reporting and other obligations under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), and face additional costs and demands on management’s time associated with being an independent, publicly traded company. If we are not able to comply with the requirements of the Exchange Act, the Sarbanes-Oxley Act, and other rules and regulations applicable to publicly traded companies, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of shares of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

As an independent, publicly traded company, we may not enjoy the same benefits that we did as a part of FedEx.

There is a risk that, following the Spin-Off, we may become more susceptible to market fluctuations and other adverse events than we would have been if we were still a part of the FedEx organizational structure. Additionally, as part of FedEx, we were able to leverage FedEx’s historical reputation, performance, and brand identity to recruit and retain key personnel to run and operate our business. As an independent, publicly traded company, we will need to develop new strategies, and it may be more difficult for us to recruit or retain such key personnel.

We have limited operating history as an independent, publicly traded company, and our historical audited consolidated financial information is not necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.

We derived the historical audited consolidated financial information included in this Annual Report from FedEx’s consolidated financial statements, and this information does not necessarily reflect the results of operations, cash flows, and financial position we would have

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achieved as an independent, publicly traded company during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:

•Prior to the Spin-Off, we operated as part of FedEx, and FedEx performed various corporate functions for us. Our historical audited consolidated financial information reflects allocations of corporate expenses from FedEx for these functions. These allocations may not reflect the costs we will incur for similar services in the future as an independent, publicly traded company.

•We entered into certain transactions with FedEx in connection with the Spin-Off, such as FedEx’s provision of transition and other services, and agreed to certain indemnification obligations, which may cause us to incur new costs.

Our historical audited consolidated financial information does not reflect changes that we expect to experience in the future as a result of the Spin-Off, including changes in the financing, cash management, operations, cost structure, and personnel needs of our business. As part of FedEx, we enjoyed certain benefits from FedEx’s operating diversity, reputation, size, purchasing power, ability to borrow, and available capital for investments. As an independent entity, we may be unable to purchase goods, services, and technologies, or access capital markets, on terms as favorable to us as those we obtained as part of FedEx prior to the Spin-Off, and our results of operations may be materially adversely affected as a result.

Certain of our directors and employees may have actual or potential conflicts of interest because of their financial interests in FedEx or because of their previous or continuing positions with FedEx.

Because of their current or former positions with FedEx, certain of our executive officers and directors own equity interests in both us and FedEx. Continuing ownership of FedEx shares and/or equity-based awards, or concurrently holding positions at FedEx and with us, could create, or appear to create, potential conflicts of interest if we and FedEx face decisions that could have implications for both us and FedEx. See Item 10. “Directors, Executive Officers, and Corporate Governance” for additional information regarding positions previously and/or currently held at FedEx by certain of our executive officers and directors.

Messrs. Martin, J. Smith, King, Rodgers, Klank, Lyons, McCoy, Witt, and Gorman and Ms. S. Smith have an economic interest in FedEx through their ownership of its shares and/or equity-based awards.

Potential conflicts of interest could arise in connection with the resolution of any dispute between FedEx Freight and FedEx regarding the terms of the agreements entered into in connection with the Spin-Off and our relationship with FedEx, or with respect to any determinations that potentially have different implications for FedEx Freight and FedEx. A dispute regarding a potential or actual conflict of interest involving FedEx Freight and FedEx could materially adversely affect our business and results of operations. See Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information about these agreements with FedEx.

Moreover, our certificate of incorporation includes a limited waiver of the doctrine of corporate opportunity. Our certificate of incorporation provides that, to the fullest extent permitted by law, and unless otherwise explicitly agreed in writing, the doctrine of corporate opportunity will not apply with respect to, and we renounce any expectancy to, any corporate opportunity that may relate to one or both of FedEx’s and our businesses from (i) FedEx or (ii) any of our directors or officers (for purposes of this clause (ii)), (x) in circumstances where the application of such doctrine to a corporate opportunity may reasonably conflict with any fiduciary duties or contractual obligations any such person may have to FedEx, and (y) insofar as such corporate opportunity is not offered to such person expressly and solely in such person’s capacity as a director or officer of FedEx Freight and such opportunity is one that we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue and such person is permitted to refer that opportunity to FedEx Freight without violating any legal obligation. Neither FedEx nor any of our directors or officers would have any duty to communicate or present any such corporate opportunity to us or be liable to us or our stockholders for breach of fiduciary duty in any capacity by reason of the fact that FedEx pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to FedEx, or does not present such corporate opportunity to us. As a result, we may not become aware of certain corporate opportunities absent such waiver.

In connection with the Spin-Off, FedEx agreed to indemnify us, and we agreed to assume and indemnify FedEx, for certain liabilities.

Under certain of the agreements we entered into with FedEx in connection with the Spin-Off, FedEx agreed to indemnify us, and we agreed to assume and indemnify FedEx, for certain liabilities. Third parties could also seek to hold us responsible for liabilities that FedEx has agreed to retain, and there can be no assurance that the indemnity from FedEx, if any, will be sufficient to protect us against the full amount of such liabilities, or that FedEx will be able to fully satisfy its indemnification obligations, or at all. Any payments to FedEx that we may be liable for pursuant to our indemnification obligations for liabilities that we agreed to assume may be significant.

In connection with the Spin-Off, we incurred significant debt obligations that could limit our financial and operating flexibility.

Prior to the completion of the Spin-Off, we incurred $4.3 billion of indebtedness, net of debt issuance costs and discounts of $36 million, consisting of $3.7 billion in our senior notes and a $0.6 billion term loan under our delayed draw term loan facility. See Item 7. “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Financial Condition” and Note 5, Long-Term Debt of the accompanying consolidated financial statements for additional information. We also entered into a revolving credit facility which provides for borrowings of up to $1.2 billion. These financing arrangements could have important consequences, including:

•requiring a substantial portion of our cash flow from operations to make interest payments on debt;

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•making it more difficult for us to satisfy debt and other obligations;

•increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;

•increasing our vulnerability to general adverse economic and industry conditions;

•reducing the cash flow available to fund capital expenditures and grow our business;

•limiting our flexibility in planning for, or reacting to, changes in our business and industry;

•placing us at a competitive disadvantage relative to our competitors that may not be as highly leveraged with debt; and

•limiting our ability to pay cash dividends or repurchase our common stock.

To the extent that we incur additional indebtedness, the foregoing risks could increase. In addition, our actual cash requirements in the future may be greater than expected.

Our cash flow from operations may not be sufficient to repay all of our outstanding debt as it becomes due, and we may not be able to borrow money, sell assets, or otherwise raise funds on acceptable terms, or at all, to refinance our debt. These factors could jeopardize our investment-grade credit rating, which would harm our ability to reinvest in organic growth opportunities, fund strategic initiatives, and provide overall financial flexibility with respect to prevailing capital allocation priorities.

Risks Relating to Our Common Stock

Substantial sales of our common stock may occur following the Spin-Off, which could cause our stock price to decline or be volatile.

FedEx stockholders who received shares of our common stock in connection with the Spin-Off, including some of its larger stockholders, may sell some or all of their shares of our common stock they received in the Spin-Off if we do not fit their investment objectives. In addition, FedEx retained 19.9% of the outstanding shares of our common stock following the Spin-Off. In order to preserve the tax-free status of the Spin-Off and certain related transactions for U.S. federal income tax purposes, FedEx must generally dispose of such shares of our common stock within 24 months of the completion of the Spin-Off. The disposition of a significant number of shares of our common stock by FedEx or other holders, or the perception in the market that such disposition might occur, may decrease the market price of our common stock.

Provisions of Delaware law, our certificate of incorporation, and our bylaws, particularly the provisions that will remain in place until the fifth annual meeting of our stockholders following the Spin-Off, may prevent or delay an acquisition of FedEx Freight, which could decrease the market price of our common stock.

Delaware law and our certificate of incorporation and bylaws each have provisions that could discourage, delay, or prevent a merger, acquisition, or other change in control that FedEx Freight’s stockholders may consider favorable. Stockholders who might desire to participate in these types of transactions may not have an opportunity to do so, even if the transaction is considered favorable to stockholders. These anti-takeover provisions could substantially impede the ability of our stockholders to benefit from a change in control or a change in our management and the Board and, as a result, may adversely affect the market price of our common stock and stockholders’ ability to realize any potential change of control premium. These provisions include, among others:

•the division of the Board into three classes of directors until the fifth annual meeting of our stockholders following the Spin-Off, with each class serving a staggered three-year term;

•requiring all stockholder action be taken at a duly called meeting of the stockholders and action cannot be taken by written consent of stockholders;

•no cumulative voting;

•removal of directors only with cause until the fifth annual meeting of our stockholders following the Spin-Off by the affirmative vote of the stockholders then entitled to vote at an election of directors having a majority of the voting power of FedEx Freight; and

•the requirement, until the fifth annual meeting of our stockholders following the Spin-Off, of approval by not less than 66 2/3% of the total voting power of all of our outstanding voting stock then entitled to vote in the election of directors to amend, alter, or repeal certain provisions of our certificate of incorporation, including those relating to the classified board, removal of directors, ability to call special stockholder meetings, ability for stockholders to act by written consent, and amendment of our certificate of incorporation.

In addition, we are subject to Section 203 of the Delaware General Corporation Law, which may, unless certain criteria are met, prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a prescribed period of time following the date on which that person or its affiliate becomes the holder of 15% or more of our outstanding voting stock.

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These provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that the Board determines is not in the best interests of us and our stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

General Risk Factors

We are also subject to other risks and uncertainties, which in some instances have had in the past and may in the future have a material adverse effect on our business, results of operations, financial condition, and the price of our common stock, including:

•Constraints, volatility, or disruption in the global capital and credit markets, our ability to maintain our current credit ratings and senior unsecured debt credit ratings, and our ability to meet our credit agreement financial covenants.

•Our inability to execute and effectively operate, integrate, leverage and grow any acquired businesses and realize the anticipated benefits of acquisitions, joint ventures, strategic alliances, and investments.

•The effects of a widespread outbreak of an illness or any other communicable disease or public health crisis.

•Inflation and supply chain impacts on the cost and availability of vehicles and service centers.

•Future material impairments in the value of our long-lived assets.

•Our inability to make capital decisions based upon projected volume levels, which may be lower or higher than expected.

•The exclusive forum provisions included in our bylaws, which could limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable.

•Loss or delay in the collection of accounts receivable, including as a result of the terminations of our factoring agreement with FedEx.

•Adverse changes in tax laws or tax rates and adverse positions taken by taxing authorities.