FedEx is spinning off its freight business

• FedEx will spin off its freight business into a new publicly traded company.
• FedEx Freight will separate from FedEx over the next 18 months.
• Express delivery services have seen slowing demand for their services.

FedEx is spinning off its freight arm into a new publicly traded company.

Called FedEx Freight, the new company will handle large cargo, while FedEx will continue to handle the parcel shipping business that shoppers might be more familiar with as their holiday packages arrive.

The separation will happen over the next 18 months, FedEx said in a statement on Thursday. Shares of FedEx jumped about 9% in after-hours trading.

"Through this process, we will unlock value for our Freight business and position FedEx to create even greater value for stockholders," CEO Raj Subramaniam said in the statement.

FedEx also cut its profit estimates for its 2025 fiscal year in earnings released on Thursday and cited a "challenging demand environment." It said it had seen lower-than-expected FedEx Freight revenue and profit as "sustained weakness in US industrial production continued to pressure less-than-truckload industry demand."

The spinoff will allow FedEx to focus more on the parcel shipping market, it said in its statement.

Bloomberg reported in October that the company, along with rival UPS, has faced less demand this year for next-day shipping as many customers look to save money with slower options.