FedEx Freight

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Human Resources Our people are at the heart of our success and are the foundation of our strong reputation. As of June 1, 2026, we had approximately 40,000 employees, and our exceptional network shapes our identity, reputation, and the type of business we strive to be.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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 -15- Table of Contents 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.”

Annual report 2026A · The company itself

“Many of our drivers begin their careers working on the dock and are trained as drivers through an internal commercial driver’s license training program. We believe this approach fosters loyalty, and we have maintained a driver turnover rate average of approximately 10% over the last three fiscal years.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Largest LTL Pure-Player with Exceptional Network Scale and Proximity We are the largest LTL freight carrier in North America with more than 26,000 service center doors and established infrastructure and coverage across 98% of all ZIP Codes in the United States (exclusive of military and PO ZIP Codes) as of June 1, 2026.”

Annual report 2026A · The company itself

“Our network is strategically aligned with the densest freight corridors in the United States and we have built our infrastructure to serve these high-demand areas efficiently.”

Annual report 2026A · The company itself

“Our LTL portfolio consists of two complementary service offerings designed to address distinct customer shipping requirements, serving both time-critical and cost-sensitive freight across a single integrated network: •FedEx Freight Priority: A premium, time-definite LTL service designed for shipments requiring the fastest available transit.”

Annual report 2026A · The company itself

“As of June 1, 2026, FedEx Freight operated nearly 30,000 motorized vehicles and over 365 locations (of which approximately 115 are owned and approximately 250 are leased), including approximately 355 shipping terminals (over 320 of which are in the United States) and approximately 10 linehaul relay sites, which are strategically located to provide service throughout North America. These facilities range in size from approximately 2,000 to 280,000 square feet of office and dock space. FedEx Freight has focused on optimizing its network footprint while maintaining strong door count and improving lane efficiency.”

Annual report 2026A · The company itself

“Continued transportation industry consolidation may further increase competition.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“•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.”

Annual report 2026A · The company itself

“While we are a provider of transportation services within North America, the majority of our transactions during the periods presented in this Annual Report are denominated in U.S. dollars.”

Annual report 2026A · The company itself

“PROPERTIES FedEx Freight’s corporate headquarters are located in Memphis, Tennessee, with some administrative offices in Harrison, Arkansas.”

Annual report 2026A · The company itself

“As of June 1, 2026, FedEx Freight operated nearly 30,000 motorized vehicles and over 365 locations (of which approximately 115 are owned and approximately 250 are leased), including approximately 355 shipping terminals (over 320 of which are in the United States) and approximately 10 linehaul relay sites, which are strategically located to provide service throughout North America.”

Annual report 2026A · The company itself

“Differentiated Offerings •Volume Services: Offers customized pricing solutions for qualifying non-urgent shipments based on network capacity, enabling us to capture overflow demand from sectors prioritizing cost efficiency over speed, such as bulk retail and industrial components.”

Annual report 2026A · The company itself

“A large number of our customers operate in sectors that we believe are poised for long-term structural growth, such as e-commerce, advanced manufacturing, and healthcare logistics.”

Annual report 2026A · The company itself

“Our LTL portfolio consists of two complementary service offerings designed to address distinct customer shipping requirements, serving both time-critical and cost-sensitive freight across a single integrated network: •FedEx Freight Priority: A premium, time-definite LTL service designed for shipments requiring the fastest available transit.”

Annual report 2026A · The company itself

“A large number of our customers operate in sectors that we believe are poised for long-term structural growth, such as e-commerce, advanced manufacturing, and healthcare logistics.”

Annual report 2026A · The company itself

“A large number of our customers operate in sectors that we believe are poised for long-term structural growth, such as e-commerce, advanced manufacturing, and healthcare logistics.”

Annual report 2026A · The company itself

“Differentiated Offerings •Volume Services: Offers customized pricing solutions for qualifying non-urgent shipments based on network capacity, enabling us to capture overflow demand from sectors prioritizing cost efficiency over speed, such as bulk retail and industrial components.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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; -17- Table of Contents •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.”

Annual report 2026A · The company itself

“We incurred indebtedness in contemplation of the Spin-Off, creating interest rate risk on the balance sheet. As discussed in Note 5, Long-Term Debt, to the accompanying consolidated financial statements, we have outstanding long-term debt (exclusive of finance leases) with an estimated fair value of $4.2 billion. Market risk for long-term debt is estimated as the potential decrease in fair value resulting from a hypothetical 10% increase in interest rates and amounts to approximately $91 million.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“While we have market risk for changes in the price of vehicle fuel, this risk is largely mitigated by our indexed fuel surcharges. For additional discussion of our indexed fuel surcharges, see “— Results of Operations — Fuel.””

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Table of Contents 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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“Seasonality Our business is cyclical in nature, as seasonal fluctuations affect volumes, revenues, and earnings.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“•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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“AI and other emerging technologies, including autonomous transportation, have the potential to alter the delivery of services and business operations across our industry.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“AI also presents emerging ethical issues and if our use of AI becomes controversial, we -12- Table of Contents 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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“AI and other emerging technologies, including autonomous transportation, have the potential to alter the delivery of services and business operations across our industry.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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; -8- Table of Contents cyberattacks; and public and investor sentiment.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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; -8- Table of Contents cyberattacks; and public and investor sentiment.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“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; -8- Table of Contents cyberattacks; and public and investor sentiment.”

Annual report 2026A · The company itself

“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.”

Annual report 2026A · The company itself

“The only foreign currency exchange rate risks to which we are exposed are the Canadian dollar and Mexican peso. The result of a hypothetical 10% adverse movement in the value of the dollar relative to the currencies in which our transactions are denominated would not be material to our financial position, results of operations, or cash flows, in all periods presented.”

Annual report 2026A · The company itself