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FedEx Newsroom

FedEx Completes Acquisition of Watkins Motor Lines; Addition of Long-Haul Less-Than-Truckload (LTL) Units Expands Heavyweight Service Portfolio for Customers

September 5, 2006

MEMPHIS, Tenn—Sept. 5, 2006 — FedEx Corp. (NYSE: FDX) announced it has completed the $780 million cash purchase of the LTL operations of Watkins Motor Lines and certain affiliates. A privately held company based in Lakeland, Fla., Watkins Motor Lines is a leading provider of long-haul LTL services with more than $1 billion in annual revenue.

The operations of Watkins Motor Lines and Watkins Canada Express, Watkins’ LTL carrier in Canada, which together include more than 140 service centers and more than 14,000 tractors and trailers, will be re-branded FedEx National LTL and FedEx Freight Canada, respectively. Re-branding of both operations will begin immediately.

"These strategic additions to the FedEx portfolio offer more flexibility and greater value to shippers in the less-than-truckload sector," said Frederick W. Smith, chairman, president and chief executive officer of FedEx Corp. "FedEx Freight, FedEx National LTL and FedEx Freight Canada create a reliable, single-source provider of one- and two-day regional as well as long-haul LTL services that customers have been requesting." Other benefits customers will enjoy include easy access to bundled transportation solutions available with other FedEx operating companies, specifically FedEx Express and FedEx Ground.

FedEx National LTL and FedEx Freight Canada each operate as a separate network within the FedEx Freight segment, which also includes FedEx Freight, FedEx Custom Critical and Caribbean Transportation Services. More than 470 service centers comprise the FedEx Freight, FedEx National LTL, and FedEx Freight Canada networks. The companies will operate nearly 54,000 tractors and trailers to meet customers’ regional and long-haul LTL needs.

"FedEx National LTL and FedEx Freight Canada will provide the certainty and reliability of service that customers have come to expect from FedEx Freight," said Douglas G. Duncan, president and chief executive officer of FedEx Freight. "As integration moves forward, FedEx National LTL will strengthen its focus on providing core long-haul services, while FedEx Freight Canada begins identifying service enhancement opportunities as we work together to grow our LTL market share throughout North America."

With a workforce of nearly 9,000, FedEx National LTL will benefit from Watkins’ rich heritage in the transportation industry and a strong workplace culture similar to that of FedEx. "Over the years, Watkins’ teams have earned a stellar reputation for professionalism and dedication to customer service," added Duncan. "They share these customer-focused priorities with an engaged FedEx workforce, a factor that will facilitate a smooth integration process, help grow our business and guide our company toward an even brighter future."

About FedEx Corp.

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenues of $32 billion, the company offers integrated business applications through operating companies competing collectively and managed collaboratively, under the respected FedEx brand. Consistently ranked among the world’s most admired and trusted employers, FedEx inspires its more than 260,000 employees and contractors to remain "absolutely, positively" focused on safety, the highest ethical and professional standards and the needs of their customers and communities. For more information, visit www.fedex.com.

About FedEx Freight

Within FedEx Corp., the FedEx Freight Segment had annual revenues of $3.6 billion in fiscal year 2006. The Segment includes FedEx Freight, a leading U.S. provider of regional next-day and second-day and interregional LTL freight services. FedEx Freight is known for exceptional service, reliability and on-time performance. Through a comprehensive network of nearly 330 service centers and advanced information systems, FedEx Freight provides service to virtually all U.S. ZIP codes, including Alaska and Hawaii. The carrier’s regional and interregional LTL service is supported by a no-fee money-back guarantee on all eligible continental U.S. shipments. Internationally, the company serves Canada, Mexico, Puerto Rico, Central and South America, the Caribbean, Europe and Asia. With corporate offices in Memphis, Tenn., the FedEx Freight Segment also includes FedEx National LTL, a leading provider of long-haul LTL services throughout North America; FedEx Freight Canada, an LTL operating company serving most points in Canada; FedEx Custom Critical, North America’s largest time-specific, critical shipment carrier; and Caribbean Transportation Services, the leading provider of airfreight forwarding services between the United States and Puerto Rico. For more information, visit the FedEx web site, fedex.com.

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