The news: FedEx has filed its first annual report since spinning off its trucking business. It shows the company is spending less on its network than at any point in its history.
For the fiscal year that ended in May, FedEx spent $3.8 billion on capital expenditures across planes, trucks and warehouses. That works out to 4% of revenue, the lowest share on record.
Capex spending fell 6% from a year earlier. It also came in below depreciation, meaning FedEx is not spending enough to fully replace the assets it is wearing out.
The context: FedEx completed the FedEx Freight spinoff at the start of June. It distributed about 80% of the new company’s shares to investors and kept a 19.9% stake that it plans to sell within two years. The remaining business is now focused entirely on parcel and express delivery.
The spinoff also brought in cash. FedEx Freight paid the parent company a $4.1 billion dividend before separating.
FedEx’s cash pile grew to $13.3 billion from $5.5 billion. But about $800 million is not FedEx's to keep. It is tariff refund money the company is holding to return to customers.
How it spends less: The pullback tracks Network 2.0, FedEx’s plan to merge its separate Express and Ground delivery networks. Running a single network requires fewer facilities.
FedEx plans to close more than 475 sites by the end of 2027, or about 30% of its footprint. It has already shut more than 200 sites. The goal is to save $2 billion.
“Our customers don’t need both an Express and a Ground truck in the same neighborhood on the same day," said Scott Ray, who runs US and Canada surface operations.
The other side: The record-low ratio is partly a spinoff effect, and it will not hold. FedEx guided capex up about $400 million next year to roughly $3.9 billion, for Network 2.0 and facility work. It also authorized a new $5 billion buyback the same week it filed.
What's next: FedEx is moving its fiscal year end from May to December. It will report a seven-month transition period covering the rest of this year, then switch to a calendar-year schedule.
