FedEx has announced it will spin off its freight business to a new publicly traded company as it aims to strengthen its business amid weak demand.
The package delivery group, considered a bellwether of global economic growth because of the wide range of items it ships, said it expects the separation to allow for more “customised operational execution” and “tailored investment and capital allocation strategies” to serve the “evolving needs” of the less than truckload (LTL) markets, which transport goods or cargo that weigh more than 150 pounds.
“This is the right time to pursue a separation as we respond to the unique dynamics of the LTL market,” said Raj Subramaniam, FedEx president and chief executive. “Through this process, we will unlock value for our freight business and position FedEx to create even greater value for stockholders.”
FedEx shares jumped 10.2 per cent in after-hours trading in New York.