FedEx’s Network 2.0 Overhaul Shows Resilience Now Beats Reach in Logistics

But the next decade, according to FedEx executives on the company’s second-quarter 2026 earnings call Thursday (Dec. 18), could reward those that compete on intelligence.

The half-century old logistics and transportation firm is betting that resilience and adaptability now matter more than raw volume in a world beset by uncertainty.

And its Q2 results saw that bet paying off. FedEx revenue rose 7% year over year to $23.5 billion, and its results topped most analyst estimates. The company also raised its full-year fiscal 2026 outlook, now forecasting revenue growth of 5% to 6%.

“FedEx delivered an outstanding second quarter as we successfully executed our growth strategy and advanced our network transformation, while navigating a highly challenging external environment,” said Raj Subramaniam, FedEx Corp. president and chief executive officer.

But the deeper story lies beneath those figures, in how FedEx is reshaping itself to compete in a logistics market that no longer rewards scale alone.

As FedEx executives repeatedly stressed to investors, the company is in the midst of one of the most ambitious corporate rewrites in modern logistics: the dismantling of a decades-old operating model in favor of a unified, data-driven network designed to survive, and profit from, what leadership sees as ongoing volatility.

See also: How Payments Innovation Underpins All-Weather Businesses and Resilient Supply Chains

Transitioning from Logistics Conglomerate to Integrated Machine

For most of its history, FedEx operated as a federation of semi-autonomous businesses: Express, Ground, Freight, Services. That structure enabled growth but also embedded inefficiencies such as duplicated assets, parallel networks and cost silos ill-suited for an era of slower global trade and tighter capital discipline.

But as of June 1, 2024, FedEx completed the operational consolidation of FedEx Ground and FedEx Services into Federal Express, creating a single integrated air-ground network. By fiscal 2025, the company formally reorganized reporting around two segments: Federal Express and FedEx Freight.

The payoff is now becoming visible. Federal Express segment operating income jumped 47% year over year in Q2, reaching $1.55 billion. Segment operating margin expanded to 7.6% on a GAAP basis, or 7.7% when adjusted for transformation-related costs.

Still, if Federal Express is the engine of near-term performance, FedEx Freight is the strategic wild card. The less-than-truckload (LTL) unit saw operating income fall sharply in the quarter, dropping 71% year over year to $90 million. Shipments declined, wages rose and the business absorbed $152 million in one-time spin-off-related costs.

But the broader business isn’t worried. FedEx executives confirmed Thursday that the Freight unit remains on track to be spun off into a separate publicly traded company on June 1, 2026, under the ticker FDXF.

Adjusted for spin-off costs, FedEx Freight’s operating margin would have been 11.3% in the quarter. As executives told investors on the call, those numbers are well within the competitive range for high-quality LTL operators.

Read more: Predictive Analytics, Not Inventory, Becomes Front Line for Supply Chain Resilience

Pricing Power Is Doing the Heavy Lifting

One of the most striking aspects of FedEx’s quarter was where growth is and isn’t coming from. Average daily package volume rose modestly, but revenue per package increased meaningfully, particularly in U.S. domestic priority and international priority services which reached $26.51, up from $25.74 a year earlier.

This is a notable departure from the eCommerce boom years, when logistics providers chased volume at the expense of margin. FedEx’s leadership has been explicit that those days are gone. “Structural cost reductions” and “pricing discipline” are now the core levers, as emphasized repeatedly during the investor call.

Less visible, but arguably among the company’s most important business lines is FedEx Dataworks, the internal unit tasked with turning the company’s vast operational data into optimization tools for routing, pricing and customer insight.

While Dataworks sits within “Corporate, Other and Eliminations” in financial reporting, its influence is embedded across margin gains, yield management and network efficiency.

For a logistics company operating across more than 220 countries and territories, data is now the binding agent that makes integration viable. Without it, Network 2.0 would be a theoretical exercise. With it, FedEx can dynamically balance air and ground capacity, adjust pricing in near real time and reduce wasted miles — small gains that compound at scale.