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Item 1A. Risk Factors

2026-07-20 compared with 2025-07-21 · 217 added, 239 removed, 304 unchanged (60% of the section changed)

In addition to the other information set forth in this Annual Report, you should carefully consider the following factors, which could materially affect our business, results of operations, financial condition, and the price of our common stock.

Additional risks not currently known to us or that we currently deem to be immaterial also may materially affect our business, results of operations, financial condition, and the price of our common stock.

In addition to the other information set forth in this Annual Report, you should carefully consider the following factors, which could materially affect our business, reputation, operating results (including components of our financial results), financial condition, cash flows, liquidity, and the price of our common stock.

Although the risks below are organized by headings and each risk is discussed separately, many are interrelated.

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supply chain disruptions;

interest rates and currency exchange rates;

interest rates;

currency exchange rates;

labor costs and unemployment levels;

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public health crises;

and geopolitical tensions or conflicts.

When individuals and companies purchase and produce fewer goods, we transport fewer goods, and as companies move manufacturing closer to consumer markets and expand the number of distribution centers, we transport goods shorter distances, which adversely affects our yields and results of operations.

Certain manufacturers and retailers are making investments to produce and store goods in closer proximity to supply chains and consumers.

Additionally, in 2025, we continued to see customer preference for slower, less costly shipping services and experienced lower fuel surcharges at FedEx Freight and reduced demand surcharges at Federal Express.

We expect service mix to shift further toward deferred service offerings in 2026.

geopolitical tensions or conflicts;

emerging global trade corridors;

and changes to social conditions and regulations.

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 materially and adversely affects our revenue per shipment and results of operations.

Certain manufacturers and retailers are also making investments to produce and store goods in closer proximity to supply chains and consumers.

Further, the scale of our operations and our relatively high fixed-cost structure, particularly with respect to our air network, make it difficult to quickly adjust to match shifting volume levels.

For more information, see “Our businesses are capital intensive, and we must make capital decisions based upon projected volume levels.” below.

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 freight and package volumes.

Additionally, recent changes in U.S.

and international trade policy, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for the transportation industry.

We also continue to experience pressure on demand for our transportation services, particularly our priority services, from the impact of elevated inflation and interest rates on consumer and business spending.

and international trade policy have further weakened business conditions for the transportation industry.

Inflation and elevated interest rates are negatively affecting consumer and business spending, and we expect inflation and elevated interest rates to continue to negatively affect our results for the remainder of calendar year 2026.

See “ Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition ” of this Annual Report for more information.

Moreover, given the nature of our business and our global operations, political, economic, and other conditions in foreign countries and regions, including international taxes, government-to-government relations, the typically more volatile economies of emerging markets, and geopolitical risks such as the ongoing conflicts between Russia and Ukraine and in the Middle East or escalations thereof, may adversely affect our business and results of operations.

For example, services in Ukraine remain limited, services in Belarus remain suspended, and we have exited our operations in Russia.

While these conflicts have not had, and we do not expect these conflicts to have, a direct material effect on our business or results of operations, the broader consequences of these conflicts, which may include further sanctions, embargoes, regional instability, and geopolitical shifts;

hostilities in the Middle East, may materially and adversely affect our business and results of operations.

For example, our services in Ukraine remain limited, our services in Belarus remain suspended, we have exited our operations in Russia, and our services in the Middle East are impacted.

The broader consequences, duration, and evolving nature of these conflicts, which have included and may include further sanctions, embargoes, regional instability, and geopolitical shifts;

airspace bans relating to certain routes, or strategic decisions to alter certain routes;

potential retaliatory action by foreign governments and other groups against us;

increased tensions between the United States and countries in which we operate;

and the extent of the conflict’s effect on our business and results of operations as well as the global economy, cannot be predicted.

Geopolitical uncertainty negatively affected our results of operations in recent years.

To the extent the continued conflicts between Russia and Ukraine and in the Middle East, or subsequent similar conflicts, adversely affect our business, they may also have the effect of heightening many other risks disclosed in this Annual Report, any of which could materially and adversely affect our business and results of operations.

and the increased tensions between the United States and countries in which we operate, cannot be predicted.

To the extent the continued conflicts between Russia and Ukraine, and the United States and Iran, and hostilities in the Middle East, or subsequent similar conflicts or hostilities, materially and adversely affect our business, they may also have the effect of heightening many other risks disclosed in this Annual Report, any of which could materially and adversely affect our business and results of operations.

Such risks include, but are not limited to, disruptions to our global technology infrastructure, including through cyberattack or cyber-intrusion, ransomware attack, or malware attack;

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our ability to implement and execute our business strategy, particularly with regard to our international business;

disruptions in global supply chains, which can limit the access of FedEx and our service providers to vehicles and other key capital resources and increase our costs and could affect our ability to achieve our goal of carbon neutrality for our global operations by calendar 2040;

disruptions in global supply chains, which can limit the access of Federal Express and our service providers to vehicles and other key capital resources and increase our costs and could affect our ability to achieve our goal of carbon neutrality for our global operations by calendar 2040;

our ability to maintain our strong reputation and the value of the FedEx brand;

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and constraints, volatility, or disruption in the capital markets.

Additional changes in international trade policies, including with respect to tariffs, and relations could significantly reduce the volume of goods transported globally, increase our costs, and materially and adversely affect our business, results of operations, cash flows, and financial condition.

government has taken certain actions that have negatively affected U.S.

trade, including imposing tariffs on many goods imported into the United States.

Additionally, many foreign governments have imposed, and others have threatened to impose, tariffs on certain goods imported from the United States.

Additional changes in international trade policies, including tariffs, and relations could significantly reduce the volume of goods transported globally, increase our costs, and materially and adversely affect our business, financial condition, cash flows, and results of operations.

The United States government has taken certain actions that have negatively affected United States trade, including imposing tariffs on many goods imported into the United States.

Additionally, many foreign governments have imposed, and others have threatened to impose, new, expanded, or retaliatory tariffs, sanctions, embargoes, and/or quotas or trade barriers on certain goods imported from the United States.

These actions have contributed to weakness in the global economy that has adversely affected our results of operations.

Increased tariffs may lead to lower levels of trade or heightened political tensions.

Additional changes to global trade policies could lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased prices or trade limitations for goods transported globally, potentially reducing customer demand for our services.

Increased tariffs or the imposition of sanctions, and/or quotas or trade barriers may lead to lower levels of trade or heightened political tensions.

Continued uncertainty and changes in global trade policies have and could continue to lead to increased tariffs, export controls, quotas, embargoes, or sanctions, which may lead to increased or volatile prices or trade limitations for goods transported globally, potentially reducing customer demand for our services.

See “ Item 7.

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government has taken action to limit the ability of domestic companies to engage in commerce with certain foreign entities under certain circumstances, and foreign governments may investigate our compliance with these restrictions.

Furthermore, given the nature of our business and our global recognizability, foreign governments may target FedEx by limiting the ability of foreign entities to do business with us in certain instances, imposing monetary or other penalties or taking other retaliatory action, which could have an adverse effect on our business, results of operations, and financial condition, as well as on the price of our common stock.

Furthermore, given the nature of our business and our global recognizability, foreign governments may target FedEx by limiting the ability of foreign entities to do business with us in certain instances, imposing monetary or other penalties or taking other retaliatory action, which could materially and adversely affect our business, financial condition, cash flows, and results of operations, as well as the price of our common stock.

Our transportation businesses and their profitability are affected by the price and availability of jet and vehicle fuel, as well as our ability to collect fuel surcharges.

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In addition, our purchased transportation expense is affected by fuel costs.

During 2026, higher fuel prices positively affected yields through increased fuel surcharges and negatively affected fuel expenses.

To date, we have been mostly successful in mitigating over time the expense effect of higher fuel costs through our indexed fuel surcharges, as the amount of the surcharges is closely linked to the market prices for fuel.

If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could adversely affect our operating results.

Lower fuel prices have negatively affected yields through lower fuel surcharges at each of our transportation segments in recent years.

If we are unable to maintain or increase our fuel surcharges because of competitive pricing pressures or some other reason, fuel costs could materially and adversely affect our operating results.

See “ Item 7.

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In addition, disruptions in the supply of fuel could have a negative effect on our ability to operate our transportation networks.

The following factors may affect fuel supply and could result in shortages and price increases in the future:

The following factors have and may continue to affect fuel prices and the supply of fuel, and have and could result in price increases and shortages in the future:

weather-related events;

natural disasters;

political disruptions or wars involving oil-producing countries;

economic sanctions imposed against oil-producing countries or specific industry participants;

political disruptions or wars involving oil-producing countries, including, economic sanctions imposed against oil-producing countries or specific industry participants;

changes in governmental policy concerning fuel production, transportation, taxes, or marketing;

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Operating Risks

The failure to successfully execute our DRIVE transformation, including Network 2.0 and Tricolor, in the expected time frame and at the expected cost may adversely affect our future results.

In 2023, FedEx announced DRIVE, a comprehensive program to improve long-term profitability.

The program includes Network 2.0, the multi-year effort to improve the efficiency with which FedEx picks up, transports, and delivers packages in the U.S.

and Canada, as well as Tricolor, the redesign of the Federal Express international air network to improve efficiency and asset utilization.

The failure to successfully execute our transformation initiatives in the expected time frame and at the expected cost may materially and adversely affect our future results.

Our transformation initiatives aim to improve long-term profitability, drive efficiency, lower our overhead and support costs, and transform our digital capabilities.

Network 2.0 is our multi-year effort to improve the efficiency with which Federal Express picks up, transports, and delivers packages in the United States and Canada.

Tricolor is our global redesign of our intercontinental air network across three distinct systems focused on priority parcel service, priority freight, and deferred parcels and freight.

In January 2026, we initiated operational transformation programs in certain international locations designed to modernize, streamline, and optimize international domestic operations.

See “ Item 1.

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• our ability to maintain coverage of U.S.

employees at Federal Express under the RLA and successfully manage challenges to the employment status of drivers employed by service providers utilized in certain linehaul and pickup-and-delivery operations, in addition to other labor-related risks;

employees under the RLA and successfully manage challenges to the employment status of drivers employed by service providers utilized in certain linehaul and pickup-and-delivery operations, in addition to other labor-related risks;

• combining the Federal Express and legacy FedEx Ground physical networks and operations, including consolidating or optimizing pickup-and-delivery and linehaul operations;

• integrating, consolidating, and implementing new administrative and back-office support functions, information-technology infrastructure, and computer systems;

• integrating and unifying the offerings and services available to FedEx customers;

• harmonizing certain operating practices;

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• legal challenges by service providers or governmental agencies seeking to slow or stop plans related to Network 2.0;

• addressing possible differences in business backgrounds, corporate cultures, and management philosophies;

• addressing employee issues so as to promote retention and maintain efficient and effective labor and employee relations;

• maintaining access to ports of call and railroads for intermodal support;

• managing the movement of certain positions to different locations;

• managing the closure and consolidation of certain buildings and the movement of certain positions, functions, or work to different locations or to third party vendors;

• obtaining any required regulatory licenses, operating authority, or contractual consents;

• managing unforeseen increased expenses or delays associated with the integration process;

• mitigating the potential distraction and diversion of resources and of management’s time and attention associated with the planned spin-off of FedEx Freight.

We may be unable to achieve the expected operational efficiencies and network flexibility, alignment of our cost base with demand, cost savings and reductions to our permanent cost structure, and other benefits from our transformation initiatives.

• managing unforeseen increased expenses or delays associated with the transformation process.

The actual amount and timing of costs to be incurred and related cost savings and reductions to our permanent cost structure resulting from these initiatives and enhancements may differ from our current expectations and estimates.

These initiatives and enhancements could also result in asset impairment charges and changes to our tax liabilities and deferred tax balances and subject us to litigation.

If we are not able to successfully implement our DRIVE transformation, our future financial results will suffer and we may not be able to achieve our financial performance goals.

All of these factors could adversely affect FedEx’s results of operations and negatively affect the price of our common stock.

If we are not able to successfully implement our transformation initiatives, our future financial results will suffer and we may not be able to achieve our financial performance goals.

All of these factors could adversely affect our results of operations and negatively affect the price of our common stock.

In addition, at times the attention of certain members of our management may be focused on our transformation initiatives and diverted from day-to-day business operations, which may disrupt our business.

A significant data breach or other disruption to our technology infrastructure could disrupt our operations and result in the loss of critical sensitive or confidential information, adversely affecting our reputation, business, or results of operations.

Our ability to attract and retain customers, efficiently operate our businesses, execute our DRIVE transformation, and compete effectively increasingly depend in part upon the sophistication, security, and reliability of our technology network, including our ability to provide features of service that are important to our customers, to protect our confidential business information and the information provided by our customers (including personal information), and to maintain customer confidence in our ability to protect our systems and to provide services consistent with their expectations.

For example, we rely on information technology to receive shipment information in advance of physical receipt of packages, to track items that move through our delivery systems, to efficiently plan deliveries, to clear shipments through customs, to execute billing processes, and to track and report financial and operational data.

We are subject to risks imposed by data breaches and operational disruptions, both random and targeted, including through cyberattack or cyber-intrusion, ransomware attack, malware attack, or denial-of-service attack by computer hackers, foreign governments and state-sponsored actors, cyber terrorists and hacktivists, cyber criminals, malicious employees or other insiders of FedEx or third-party service providers, and other groups and individuals.

Data breaches and other technology disruptions of companies and governments continue to increase as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased and we, our customers, and third parties increasingly store and transmit data by means of connected information technology systems.

Additionally, risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our FedEx enterprise automation platforms, data leakage, cyber-fraud, and human error pose a direct threat to our products, services, systems, and data and could result in unauthorized or block legitimate access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information.

The technology infrastructure of acquired businesses, as well as their practices related to the use and maintenance of data, could also present issues that we were not able to identify prior to the acquisition.

For example, ShopRunner, which we acquired in 2021, collects and stores certain personal data of its merchants and their buyers, its partners, consumers with whom it has a direct relationship, and

users of its applications.

Additionally, it uses third-party service providers and subprocessors to help deliver services to merchants and their buyers.

These service providers and subprocessors may store or access personal data and/or other confidential information.

The foregoing factors increase the risk of data incidents and the amount of potential exposure in the event of a data breach.

We also depend on and interact with the technology and systems of third parties, including our customers and third-party service providers such as cloud service providers and delivery services.

Our ability to attract and retain customers, efficiently operate our businesses, execute our business strategy, conduct transformation initiatives, and compete effectively increasingly depends in part upon the sophistication, security, and reliability of our technology network, including our ability to provide features of service that are important to our customers, to protect our confidential business information including the sensitive and personal information provided by our customers, and to maintain customer confidence in our ability to protect our systems and to provide services consistent with their expectations.

We are subject to risks imposed by data breaches and operational disruptions, both random and targeted, including through cyberattack or cyber-intrusion, ransomware attack, malware attack, or denial-of-service attack by computer hackers, foreign governments and state-sponsored actors, cyber terrorists and hacktivists, cyber criminals, malicious employees or other insiders of Federal Express or third-party service providers, and other groups and individuals.

Data breaches and other technological disruptions of companies and governments continue to increase as the number, intensity, and sophistication of attempted attacks and intrusions from around the world have increased and we, our customers, and third parties increasingly store and transmit data by means of connected information technology systems.

Additionally, risks such as code anomalies, “Acts of God,” transitional challenges in migrating operating company functionality to our FedEx enterprise automation platforms, data leakage, cyber-fraud, and human error pose a direct threat to our products, services, systems, and data and could result in unauthorized intrusion or block legitimate access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information.

The rapid evolution and increased sophistication, availability, and use of emerging technologies such as AI technologies and machine learning by us, our customers, suppliers, business partners, third-party providers, and bad actors may increase the likelihood of the occurrence of data breaches and operational disruptions.

We also depend on and interact with the technology and systems of third parties for a variety of reasons, including AI-enabled technologies, encryption and authentication technology, employee email, and other communication technologies, cloud services, delivery services, back-office support, and other functions.

Certain third parties host, process, or have access to information we maintain about our company, customers, employees, and vendors and/or operate systems that are critical to our business operations and services.

Like us, these third parties are subject to risks imposed by data breaches, cyberattacks, and other events or actions that could damage, disrupt, or close down their networks or systems.

Like us, these third parties are subject to risks imposed by data breaches, cyberattacks, and other events or actions that could damage, disrupt, or close their networks or systems.

We have security processes, protocols, and standards in place, including contractual provisions requiring such security measures, that are applicable to such third parties and are designed to protect information that is held by them, or to which they have access, as a result of their engagements with us.

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Certain third parties also have and may in the future experience operational disruptions or human error that could result in unauthorized access to sensitive or confidential data regarding our operations, customers, employees, and suppliers, including personal information.

See “Failure of third-party service providers to perform as expected, or disruptions in our relationships with those providers or their provision of services to FedEx, could have a material adverse effect on our business and results of operations.” below for more information.

In 2025, the information systems of one of our third-party service providers experienced a security breach that resulted in unauthorized access to the third-party’s cloud environment, including certain systems that contained our data.

This incident did not have a material adverse effect on our business or results of operations.

However, there can be no assurance that similar events will not have such an effect in the future.

See “Failure of third-party service providers, vendors, or suppliers to perform as expected, or disruptions in our relationships with such third parties or their provision of services to Federal Express, could materially and adversely affect our business, financial condition, cash flows, and results of operations.”

From time to time we experience disruptions to our complex, global technology infrastructure, including our computer systems and websites.

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Additionally, a security breach could require us to devote significant management resources to address the problems created.

These types of adverse effects could also occur in the event the confidentiality, integrity, or availability of company and customer information was compromised due to a data loss by FedEx or a trusted third party.

We or the third parties with which we share information may not discover any security breach and loss of information for a significant period of time after the security breach occurs.

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It may also not be clear how best to contain and remediate any harm caused by the cybersecurity incident, and certain errors or actions could be repeated or compounded before they are discovered and remediated.

Based on the sophistication of threat actors and the size and complexity of our information systems and network environment, among other factors, an investigation into a cybersecurity incident could take a significant amount of time to complete.

Based on the sophistication of these threat actors and the size and complexity of our information systems and network environment, among other factors, an investigation into a cybersecurity incident could take a significant amount of time to complete.

In addition, while the investigation of a cybersecurity incident is ongoing, we may not know the full extent of the harm caused by a threat actor, and such harm may spread both internally and to certain customers, vendors, or other third parties.

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A significant number of our employees as well as customers and others with whom we do business continue to work remotely or in hybrid models, which may heighten these risks.

These risks may also be heightened by our DRIVE transformation and the planned spin-off of FedEx Freight into a separate, publicly traded company.

These risks may also be heightened by our transformation initiatives.

Furthermore, we are subject to an increasing number of cybersecurity compliance and reporting obligations in different jurisdictions that vary in their scope and application, creating conflicting reporting requirements.

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Any or all of these factors could further increase the costs and consequences of a cybersecurity incident on our business and results of operations.

See “Our business is subject to complex and evolving U.S.

and foreign laws and regulations regarding data protection.” for additional information on risks related to legal and regulatory developments with respect to data protection.

See “Our business is subject to complex and evolving United States and foreign laws and regulations regarding data protection and cybersecurity, which impose significant costs and regulatory risks that are likely to increase over time” for additional information on risks related to legal and regulatory developments with respect to data protection.

We have invested and continue to invest in technology security initiatives, information-technology risk management, business continuity, and disaster recovery plans, including investments to retire and replace end-of-life systems.

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Despite our efforts, we are not fully insulated from data breaches, technology disruptions, data loss, and cyber-fraud, which could adversely affect our competitiveness and results of operations.

See “Item 1A.

Risk Factors” of our Annual Report on Form 10-K for the year ended May 31, 2021 for information regarding the 2017 NotPetya cyberattack at TNT Express and immaterial cyber incidents we experienced in 2017 and 2018.

Additionally, we and our third-party service providers, vendors, and suppliers have experienced repeated attempts by cyber criminals, some of which have been successful, to gain access to customer accounts for the purposes of fraudulently diverting and misappropriating items being transported in our network, fraudulently charging shipment fees to customer or franchisee accounts, and fraudulently sending e-mails to recipients purporting to be from FedEx.

To date, none of these fraudulent cyber activities have caused a material disruption to our systems or resulted in any material costs to FedEx.

Additionally, we and our third-party service providers, vendors, and suppliers have experienced repeated attempts, some of which have been successful, by cyber criminals to gain access to customer accounts for the purposes of fraudulently diverting and misappropriating items being transported in our network, fraudulently charging shipment fees to customer accounts, and fraudulently sending e-mails to recipients purporting to be from FedEx.

Our security processes and initiatives may be unable to detect or prevent a breach or disruption in the future.

Additionally, the rapid ongoing evolution and increased adoption of emerging technologies such as artificial intelligence and machine learning may make it more difficult to anticipate and implement protective measures to recognize, detect, and prevent the occurrence of any of the cyber events described above.

We are self-insured for certain costs associated with our operations, and insurance and claims expenses could have a material adverse effect on us.

Although we do not believe the cyber incidents and other systems disruptions that we and our third-party service providers have experienced to date have had a material effect on our business, there is no guarantee that a future cybersecurity threat or incident will be detected and remediated to not materially and adversely affect our business strategy, reputation, results of operations, or financial condition.

While we believe we devote significant resources to network security, disaster recovery, employee training and other measures to secure our information technology systems and prevent unauthorized access to or loss of data, there are no guarantees that they will be adequate to safeguard against all cyber incidents, systems disruptions, system compromises or misuses of data.

We are increasingly utilizing AI within our operations.

The development and deployment of AI technologies involve significant risks and uncertainties, and our ability to successfully implement and use AI technologies depends on a variety of factors, including the reliability, accuracy, security, and effectiveness of the technologies;

the availability of qualified personnel and technical infrastructure;

the performance of third-party vendors and service providers;

evolving regulatory requirements and industry standards;

and customer and market acceptance.

AI technologies are rapidly evolving and may produce inaccurate, flawed, or unintended outputs or outcomes.

Our use of AI may also increase risks related to cybersecurity, data privacy, intellectual property, confidentiality, regulatory compliance, and reputational harm.

In addition, evolving laws, regulations, and governmental guidance relating to AI may require us to incur additional compliance costs, change our business practices, or limit our ability to develop or use AI technologies.

Our competitors may also adopt AI technologies more quickly or more effectively than we do.

Further, our investments in AI technologies may not improve our services, operations, efficiency, or profitability to the extent anticipated and may divert resources from other strategic initiatives.

Any failure to successfully develop, implement, manage, or use AI technologies in a timely, compliant, and responsible manner could adversely affect our business, reputation, results of operations, or financial condition.

We are self-insured for certain costs associated with our operations, and insurance and claims expenses could materially and adversely affect our business, financial condition, cash flows, and results of operations.

We are self-insured up to certain limits for costs associated with workers’ compensation claims, vehicle accidents, property and cargo loss, general business liabilities, and benefits paid under employee disability programs.

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Material increases in the magnitude of claims, changes to healthcare costs, accident frequency and severity, insurance retention levels, judgment and settlement amounts, associated legal expenses, and other factors could result in unfavorable differences between actual self-insurance costs and our reserve estimates.

As a result, our insurance and claims costs could increase materially in the future, which could adversely affect our results of operations and financial condition.

As a result, our insurance and claims costs could materially increase in the future, which could adversely affect our results of operations and financial condition.

As a supplement to our self-insurance program, we maintain coverage with excess insurance carriers for potential losses that exceed the amounts we self-insure.

Periodically, we evaluate the level of insurance coverage and adjust insurance levels based on risk tolerance, risk volatility, and premium expense.

Although we believe our aggregate insurance limits should be sufficient to cover our historic claims amounts, 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.

See Note 9 of the unaudited condensed consolidated financial statements included in “Item 1.

Financial Statements” of our Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2022 for more information.

Although we believe our aggregate insurance limits should be sufficient to cover our historic claims amounts, we can provide no assurance that such coverage will be adequate to protect us from costs incurred with certain events.

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.

Given this trend, it is possible that additional claims could exceed our aggregate coverage limits.

If another claim were to exceed our aggregate insurance coverage, we would bear the excess in addition to our exposure not covered by excess insurance carriers.

If a claim were to exceed our aggregate insurance coverage, we would bear the excess exposure not covered by excess insurance carriers.

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.

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Because transportation assets continue to be a target of terrorist activities, governments around the world are adopting or are considering adopting stricter security requirements that will increase operating costs and potentially slow service for businesses, including those in the transportation industry.

These security requirements are not static, but change periodically as the result of regulatory and legislative requirements, imposing additional security costs and creating a level of uncertainty for our operations.

For example, the TSA requires FedEx to comply with a Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements.

These security requirements change periodically as the result of regulatory and legislative requirements, imposing additional security costs and creating a level of uncertainty for our operations.

For example, the TSA requires Federal Express to comply with a Full All-Cargo Aircraft Operator Standard Security Plan, which contains evolving and strict security requirements.

It is reasonably possible that these rules or other future security requirements could impose material costs on us or slow our service to our customers.

The effects on our operations of avoiding areas of the world, including airspace, in which there are geopolitical conflicts and the targeting of aircraft by parties to those conflicts can also be significant.

Moreover, a terrorist attack directed at FedEx or other aspects of the transportation infrastructure could disrupt our operations and adversely affect demand for our services.

Failure of third-party service providers to perform as expected, or disruptions in our relationships with those providers or their provision of services to FedEx, could have a material adverse effect on our business and results of operations.

FedEx has engaged 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 .

There can be no assurance that our third-party service providers will adhere to contractual service performance or compliance requirements, and such service providers may suffer disruptions to their systems, labor groups, or supply chains that could adversely affect their services.

We may also have disagreements with such service providers, and related contracts may be terminated or may not be extended or renewed.

Additionally, from time to time such service providers have engaged in fraudulent activities in the course of their business

relationships with FedEx.

Moreover, a terrorist attack, or acts of sabotage by nation state actors using hybrid operations, directed at Federal Express or other aspects of the transportation infrastructure could disrupt our operations and adversely affect demand for our services.

Failure of third-party service providers, vendors, and suppliers to perform as expected, or disruptions in our relationships with such third parties or their provision of services to FedEx, could materially and adversely affect our business, financial condition, cash flows, and results of operations.

FedEx has engaged third-party service providers, vendors, and suppliers to perform certain key functions, including the provision of information technology infrastructure, application development, maintenance and support, and end-user support services.

There can be no assurance that our third-party service providers, vendors, and suppliers will perform contractual service obligations or adhere to compliance requirements, and such service providers, vendors, and suppliers may suffer disruptions to their systems, labor groups, or supply chains that could adversely affect their services.

FedEx may also have disagreements with such service providers, vendors, or suppliers, and related contracts may be terminated or may not be extended or renewed.

Additionally, from time to time third-party service providers, vendors, or suppliers have engaged in fraudulent activities in the course of their business relationships with FedEx.

Any of the foregoing could disrupt our operations and result in a material adverse effect on our reputation, business, or results of operations.

The effects of a widespread outbreak of an illness or any other communicable disease or public health crisis on our business, results of operations, cash flows, and financial condition are highly unpredictable.

A widespread outbreak of an illness or any other communicable disease or public health crisis could have varying effects on the demand for our services, our business operations, and the global economy and supply chains.

The extent of the effect of such an event on our business, results of operations, and financial condition, as well as the global economy, will be dictated by developments that cannot be predicted, such as its duration and spread;

the success of efforts to contain it and treat its effects, such as travel bans and restrictions, quarantines, shelter-in-place orders, business and government shutdowns, and other restrictions;

The effects of a widespread outbreak of an illness or any other communicable disease or public health crisis could materially and adversely affect our business, results of operations, cash flows, and financial condition.

The extent of the effect of such an event on our business, results of operations, and financial condition, as well as the North American and global economies, will be dictated by developments that cannot be predicted, such as:

its duration and spread;

the success of efforts to contain it and treat its effects, including travel bans and restrictions, quarantines, shelter-in-place orders, business and government shutdowns, and other restrictions;

the possibility of additional subsequent widespread outbreaks and variant strains and the effect of actions taken in response;

and the resulting effects on the economic conditions in the global markets in which we operate.

and the resulting effects on the economic conditions in the markets in which we operate.

Our business is labor and capital intensive in nature, which may require us to incur higher costs to operate our networks during such an event.

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Further, due to the size, scope, and geographically dispersed nature of our operations, the expenses we incur to protect the health and safety of our team members and customers may be higher than similar expenses incurred by companies in other industries.

To the extent a widespread outbreak of an illness or any other communicable disease or public health crisis adversely affects our business and financial results, it may also have the effect of heightening many other risks described in this section, any of which could materially and adversely affect our business, results of operations, and financial condition.

Such risks include, but are not limited to, additional changes in the state of the global economy and international trade policies and relations;

our ability to execute our DRIVE transformation, implement our business strategy, and effectively respond to changes in market dynamics and customer preferences;

our ability to execute our transformation initiatives, implement our business strategy, and effectively respond to changes in market dynamics and customer preferences;

our strong reputation and the value of the FedEx brand;

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and the effect of litigation or claims from customers, team members, suppliers, regulators, or other third parties relating to the crisis or our actions in response.

See “Item 1A.

Risk Factors” and “Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition” of our Annual Reports on Form 10-K for the years ended May 31, 2020, May 31, 2021, May 31, 2022, and May 31, 2023 for information regarding the COVID-19 pandemic and its effects on our business, results of operations, and financial condition.

Failure to complete the adjustment of our air network to remove costs related to services previously provided to the United States Postal Service (“USPS”) could adversely affect our profitability.

The contract for Federal Express to provide the USPS transportation services within the United States expired by its terms on September 29, 2024, and Federal Express continued to provide air transportation services domestically and to Puerto Rico through the contract’s expiration.

If we are unable to complete the adjustment of our air network to remove costs related to the services previously provided to the USPS, our profitability could be negatively affected.

Strategic Risks

Failure to successfully implement our business strategy and effectively respond to changes in market dynamics and customer preferences will cause our future financial results to suffer.

We are making significant investments and other decisions in connection with our long-term business strategy, such as those related to our DRIVE transformation, including Network 2.0 and Tricolor.

See “The failure to successfully execute our DRIVE transformation, including Network 2.0 and Tricolor, in the expected time frame and at the expected cost may adversely affect our future results.” above and “ Item 1.

We are making significant investments and other decisions in connection with our long-term business strategy, such as those related to our transformation initiatives.

See “The failure to successfully execute our transformation initiatives in the expected time frame and at the expected cost may materially and adversely affect our future results.” above and “ Item 1.

Business ” and “ Item 7.

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We may not be able to derive the expected operational efficiencies and network flexibility, alignment of our cost base with demand, cost savings and reductions to our permanent cost structure, digital revenue growth, and other benefits from our strategic investments and other decisions.

For example, in June 2024, Federal Express announced a workforce reduction plan in Europe as part of its ongoing measures to reduce structural costs.

For example, in January 2026, we initiated operational transformation programs in certain international locations designed to modernize, streamline, and optimize international and domestic operations.

See “ Item 7.

Management’s Discussion and Analysis of Results of Operations and Financial Condition ” of this Annual Report for more information.

The execution of the plan is subject to a consultation process that is expected to occur over an 18-month period in accordance with local country processes and regulations.

The execution of the programs is subject to a consultation process in accordance with local country processes and regulations.

The actual amount and timing of business optimization costs and related cost savings resulting from the workforce reduction plan are dependent on local country consultation processes and regulations and negotiated social plans and may differ from our current expectations and estimates.

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Further, in developing our business strategy, we make certain assumptions including, but not limited to, those related to customer demand and the mix of services to be purchased by our customers, the future rate of e-commerce growth and inventory restocking, passenger airline cargo capacity, competition, and the global economy, and actual market, economic, and other conditions may be different from our assumptions.

As technology (including artificial intelligence and machine learning), customer behavior, and market conditions continue to evolve, it is important that we maintain the relevance of our brand and service offerings to our customers.

As technology (including AI and machine learning), customer behavior, and market conditions continue to evolve, it is important that we maintain the relevance of our brand and service offerings to our customers.

If we are not able to successfully implement our business strategy and effectively respond to changes in technology, customer preferences, and market dynamics, our future financial results will suffer.

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Business ” of this Annual Report under the caption “Strategy.”

The planned spin-off of FedEx Freight may not be completed on the terms or timeline currently contemplated, if at all, and there is no guarantee that the spin-off, if completed, will achieve the intended financial and strategic benefits.

In December 2024, we announced our intention to separate FedEx Freight from our portfolio structure through the creation of a separate, publicly traded company (“NewCo”).

The planned separation, which would be implemented through the spin-off of shares of NewCo to FedEx stockholders, is expected to be tax-free for U.S.

federal income tax purposes for FedEx stockholders and be completed by June 2026.

Completion of the planned spin-off is subject to the final approval of our Board of Directors and will be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the receipt and continuing validity of a private letter ruling from the Internal Revenue Service (“IRS”) and/or favorable opinions of our U.S.

tax advisors with respect to the tax-free nature of the transaction, the receipt of other regulatory and contractual approvals, and the availability of financing for NewCo on satisfactory terms.

The proposed spin-off is complex in nature, and unanticipated changes or developments could delay or prevent the completion of the spin-off or cause the spin-off to occur on terms or conditions that are different or less favorable than expected.

Whether or not we complete the spin-off, we may face significant challenges in connection with the transaction, including, without limitation:

• the diversion of the attention of our Board of Directors and senior management from the pursuit of our business strategy and long-term planning and of our management and employees from day-to-day operations;

• our ability to maintain NewCo’s continued support of our DRIVE transformation, Network 2.0, Tricolor, and other strategic initiatives;

• our ability to maintain operational, commercial, data and information technology, brand and intellectual property, human resources, finance, legal, sales, and marketing continuity where necessary between FedEx and NewCo and establish stand-alone functions and infrastructure at NewCo where necessary;

• the risk that if the IRS determines that certain steps of the planned spin-off do not qualify for tax-free treatment for U.S.

federal income tax purposes, FedEx and its stockholders could incur significant tax liabilities;

• costs and expenses related to the planned spin-off (which are expected to be significant), including costs related to commercial and operational dis-synergies;

restructuring and other transaction expenses;

expenses related to establishing stand-alone operational, commercial, personnel, and digital and technology infrastructure at NewCo;

and accounting, tax, legal, and other professional services expenses, any of which may be higher than initially expected;

• retaining existing business and operational relationships, including with customers, suppliers, employees, and other counterparties;

• addressing employee issues so as to promote retention and motivation and maintain efficient and effective labor and employee relations;

• obtaining any required regulatory licenses, operating authority, or contractual consents;

• determining the appropriate allocations of assets and liabilities between FedEx and NewCo, as well as the terms governing the relationship between FedEx and NewCo following the spin-off;

• potential negative reactions from investors and other external stakeholders.

There can be no assurance that the spin-off, if completed, will achieve the intended financial and strategic benefits (which are based on a number of assumptions, some or all of which may prove to be incorrect) or provide greater value to our stockholders than that reflected in the current price of our common stock, or that the dis-synergies of the transaction (including costs of related restructuring transactions) will not exceed the anticipated amounts.

The market price of our common stock could be subject to significant fluctuation or otherwise be adversely affected by the uncertainties described above.

Changes in the stockholder base of FedEx and/or NewCo following the planned spin-off could also cause the price of either company’s common stock to fluctuate.

If the planned spin-off occurs, FedEx and NewCo will each be smaller, less diversified companies with more concentrated areas of focus.

As a result, FedEx and NewCo may become more vulnerable to changing macroeconomic and market conditions;

the results of

operations, cash flows, effective tax rate, and other financial and operating metrics of each company may be subject to increased volatility;

and the ability of each company to fund capital expenditures and investments, pay dividends, and service debt may be diminished.

To the extent challenges related to the planned spin-off of NewCo adversely affect our business, they may also have the effect of heightening other risks disclosed in our Annual Report, any of which could materially and adversely affect our business, results of operations, and the price of our common stock.

Such risks include, but are not limited to, our ability to execute our DRIVE transformation, Network 2.0, and broader business strategy and effectively respond to changes in market dynamics and customer preferences;

disruptions to our technology infrastructure, including through cyberattack or cyber-intrusion, ransomware attack, or malware attack;

our ability to attract and retain employee talent and maintain our company culture;

our ability to achieve or demonstrate progress on our goal of carbon neutrality for our global operations by calendar 2040;

and our ability to maintain our strong reputation and the value of the FedEx brand.

We may not be able to achieve our calendar 2029 financial performance targets.

On February 12, 2026, we announced a comprehensive multi-year financial framework with financial performance targets for 2029.

Our ability to achieve these goals is dependent on a number of factors, including the other risk factors described in this Annual Report.

We may fail to achieve our long-term financial performance targets if we are unsuccessful in implementing our strategies, our estimates or assumptions change, or for any other reason.

Our inability to achieve these targets could materially and adversely affect our results of operations and financial condition, and the price of our common stock may be negatively affected.

We may not realize the anticipated benefits from the Spin-Off, which could harm our business.

On June 1, 2026, we completed the Spin-Off.

We may incur significant additional expenses and challenges arising from and following the Spin-Off of the FedEx Freight business.

We may not be able to achieve the full strategic, financial, operational, or other benefits that are expected to result from the Spin-Off, and the anticipated benefits of the Spin-Off are based on a number of assumptions, some of which may prove incorrect.

A failure to realize all or some of the expected benefits of the Spin-Off, or if such benefits are delayed, could materially and adversely affect our business, financial condition, cash flows, and results of operations.

In addition, there can be no assurance that the combined value of the shares of the two separated companies will be equal to or greater than the value of our common stock had the Spin-Off not occurred.

In connection with the Spin-Off, we and FedEx Freight entered into various agreements that provide for the performance of certain services by each company for the benefit of the other, including a separation and distribution agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, an intellectual property cross-license agreement, a trademark license agreement, stockholder and registration rights agreement, and an indemnification agreement.

The separation and distribution agreement provides for cross-indemnities between us and FedEx Freight for liabilities allocated to the respective party pursuant to the terms of such agreement.

If FedEx Freight or its successor entities are unable to satisfy their obligations under these agreements, we could incur operational difficulties or losses.

In addition, the terms of the Spin-Off include licenses and other arrangements to provide for certain ongoing use of intellectual property in the operations of both businesses.

For example, both us and FedEx Freight retain the ability to make ongoing use of certain brands and other intellectual property.

As a result of this continuing shared use of brands and other intellectual property, there is a risk that conduct or events materially and adversely affecting the reputation of FedEx Freight could also materially and adversely affect our reputation.

In addition, we retained an equity interest in FedEx Freight in connection with the Spin-Off.

We cannot predict the trading price of shares of FedEx Freight’s common stock and the market value of the FedEx Freight shares is subject to market volatility and other factors outside of our control.

As previously disclosed, we will divest our ownership interest in FedEx Freight within twenty-four months from the Spin-Off, but there can be no assurance regarding the timing of, or timeframe over which, such divestiture or divestitures may occur, or the amount of proceeds to be received by us in connection with any such divestitures within the twenty-four month timeframe.

The Spin-Off could result in substantial tax liability to us and our stockholders.

We received an opinion of counsel and a private letter ruling from the U.S.

Internal Revenue Service (the “IRS”) regarding the qualification of the Spin-Off and certain related transactions as a transaction that is generally tax-free to us and our stockholders for U.S.

federal income tax purposes.

While the private letter ruling is generally binding on the IRS to the extent the factual representations and assumptions on which it is based are true and accurate, the opinion of our counsel is not binding on the IRS or the courts.

There can be no assurance that the IRS or a court

will not take a contrary position with respect to the conclusions reached in the tax opinion.

If the IRS ultimately determines that the Spin-Off is taxable, then the Spin-Off could be treated as a taxable dividend or capital gain to our stockholders for U.S.

federal income tax purposes, and we could incur significant U.S.

tax liabilities.

In connection with the Spin-Off, we entered into a tax matters agreement with FedEx Freight, pursuant to which FedEx Freight agreed to not enter into transactions that could cause the Spin-Off or any related transactions to be taxable to us and to indemnify us for any tax liability resulting from any such transaction.

However, there can be no assurance that FedEx Freight would have the resources or liquidity required to indemnify us for any such tax liability.

We depend on our strong reputation and the value of the FedEx brand.

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data breaches, cyberattacks, or technology infrastructure disruptions;

utilization of emerging technologies such as artificial intelligence;

utilization of emerging technologies such as AI;

allegations of noncompliance with laws or claims that result in litigation;

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or our executive compensation practices.

With the increase in the use of artificial intelligence and social media outlets such as Facebook, YouTube, Instagram, X (formerly Twitter), TikTok, and other platforms, adverse publicity, whether warranted or not, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond.

Certain forms of technology such as artificial intelligence also allow users to alter or create images, videos, and other information relating to FedEx and present the information in a false or misleading manner that seems real.

With the rapid growth in the use of AI and the global influence of social media outlets such as Facebook, YouTube, Instagram, X, TikTok, and other platforms, adverse publicity, whether warranted or not, can be disseminated quickly and broadly without context, making it increasingly difficult for us to effectively respond.

Certain forms of technology and AI also allow users to alter or create images, videos, and other information relating to FedEx and present the information in a false or misleading manner that seems real, including attempts by third parties to masquerade as FedEx couriers and customer service agents for the purpose of deceiving and defrauding FedEx customers.

Further, our actual or perceived position, lack of position, or perceived lack of transparency on environmental, social, political, public policy, labor relations, or other sensitive issues could harm our reputation with certain groups, including our customers, stockholders, team members, advocacy groups, government representatives, and regulatory bodies.

Expectations regarding these matters continue to evolve and are not uniform.

Although we try to adapt and maintain a balance that satisfies all of these stakeholders, we may not always be able or choose to move as quickly or in the direction that various competing interests desire or demand, which could adversely impact our reputation.

Damage to our reputation and loss of brand equity could reduce demand for our services and/or create difficulties in retaining and recruiting employee talent and could materially and adversely affect our business, results of operations, cash flows, and financial condition, as well as require additional resources to rebuild our reputation and restore the value of our brand and goodwill.

Damage to our reputation and loss of brand equity could reduce demand for our services and/or create difficulties in retaining and recruiting employee talent and could materially and adversely affect our business, financial condition, cash flows, and results of operations, as well as require additional resources to rebuild our reputation and restore the value of our brand and goodwill.

We face intense competition.

The transportation and business services markets are both highly competitive and sensitive to price and service, especially in periods of little or no macroeconomic growth.

Some of our competitors have more financial resources and competitive advantages than we do, appear willing to operate at little or no margin to gain market share, or they are owned, controlled, or subsidized by foreign governments, which enables them to raise capital more easily.

Some of our competitors have more financial resources and competitive advantages than we do, appear willing to operate at little or no margin to gain market share, or are owned, controlled, or subsidized by foreign governments, which enables them to raise capital more easily.

We face intense competition from global air freight forwarders for air freight business.

We also compete with regional transportation providers that operate smaller and less capital-intensive transportation networks and startup companies that combine technology with flexible labor solutions such as crowdsourcing to focus on local market needs.

In addition, some high-volume package shippers are developing and implementing in-house delivery capabilities and utilizing independent contractors for deliveries, which could in turn adversely affect our results of operations.

For example, Amazon has established a network of hubs, aircraft, and vehicles, recently began offering an LTL freight service for inbound shipments to its distribution facilities, and has expressed an intention to offer its internal delivery capabilities broadly to third parties.

For example, Amazon has established a network of hubs, aircraft, and vehicles, recently began offering an LTL freight service for inbound shipments to its distribution facilities, and recently began offering its internal delivery capabilities broadly to third parties.

See “ Item 1.

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We believe we compete effectively with these companies - for example, by providing more reliable service at compensatory prices.

However, the existence of an irrational pricing environment could limit our ability to maintain or increase our prices (including our fuel surcharges in response to rising fuel costs), which could adversely affect our results of operations.

While we believe we compete effectively through our current and planned service offerings, if our current competitors or potential future competitors offer a broader range of services or better service levels, more effectively bundle their services, or offer services at lower prices, it could adversely affect our results of operations.

Continued transportation industry consolidation may further increase competition.

Moreover, if high-volume package shippers further develop or expand internal capabilities for the services we provide, it may reduce our revenue and

could negatively affect our financial condition and results of operations.

Moreover, if high-volume package shippers further develop or expand internal capabilities for the services we provide, it may reduce our revenue and could negatively affect our financial condition and results of operations.

These effects could be exacerbated if high-volume package shippers offer such capabilities to third parties.

News regarding such developments or expansions could also negatively affect the price of our common stock.

Our industry may be affected by changes in technology and our competitors may implement emerging technologies, including artificial intelligence applications, more quickly and more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

New and emerging technologies continue to create additional sources of competition, and if we fail to incorporate new and emerging technologies as effectively as our competitors, our competitive position may be harmed.

Advancements in technology, such as advanced safety systems;

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third-party supply chain insight and management;

artificial intelligence;

vehicle platooning;

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Management’s Discussion and Analysis of Results of Operations and Financial Condition - Results of Operations and Outlook - Consolidated Results - Asset Impairment Charges” of this Annual Report for information regarding the noncash impairment charges recorded in 2026 and 2025 in connection with our decision to permanently retire certain aircraft and related engines from service.

Our inability to execute and effectively operate, integrate, leverage, and grow acquired businesses and realize the anticipated benefits of acquisitions, joint ventures, and strategic alliances and investments could materially adversely affect us.

Our strategy for long-term growth, productivity, and profitability depends in part on our ability to make prudent strategic acquisitions and investments, form joint ventures or strategic alliances, and realize the expected benefits from these transactions.

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Additionally, we may be required to make significant capital expenditures and/or incur certain operating expenses following the completion of certain transactions, which may be higher than initially expected.

For example, existing and future customer data and processes in the systems of FedEx and ShopRunner may require significant added expense to integrate.

While we expect our past and future acquisitions and strategic transactions to enhance our value proposition to customers and improve our business and long-term profitability, there can be no assurance that we will realize our expectations within the time frame we have established, if at all, or that we can continue to support the value we allocate to acquired businesses, including their goodwill or other intangible assets.

We have previously incurred goodwill impairment charges related to certain of our acquisitions, some of which have been material, and may incur additional goodwill impairment charges in the future.

We may not achieve the expected strategic or financial benefits relating to our InPost investment.

We, as a member of a consortium, have entered into a conditional agreement on a recommended all-cash public offer for all issued and outstanding shares of InPost S.A.

(“InPost”), which offer is subject to regulatory approvals and other conditions.

Following the completion of the offer, the consortium will be structured with us holding 37%, and thereafter we and InPost intend to enter into arm’s length commercial agreements.

Because InPost would continue to operate as a standalone company and we would not control this entity and must rely on the actions of other investors and the management of the entity, we may not be able to influence key strategic or operational decisions.

In addition, delays in obtaining required regulatory approvals or completing the related commercial arrangements (or failure to obtain such approvals or complete such arrangements) could materially and adversely affect the timing or value of the investment.

Even if the regulatory approvals are obtained, other conditions are met, and our commercial arrangements with InPost are finalized, there can be no assurance that our investment and the commercial agreements will achieve the strategic or financial benefits we currently expect.

Human Resource Management Risks

Labor-related disruptions and potential changes in labor laws may adversely affect our business and results of operations.

Our business is labor intensive in nature, utilizing large numbers of numerous classes of employees and service providers.

Labor-related disruptions and potential changes in labor laws may materially and adversely affect our business, financial condition, cash flows, and results of operations.

Our business is labor intensive in nature, utilizing large numbers of employees across numerous classes, as well as service providers.

Despite continual organizing attempts by labor unions, our employees in the U.S.

and Canada, except our pilots, are not unionized (we acquired FedEx Supply Chain in 2015, which already had a small number of unionized employees).

Additionally, certain of our employees outside of the U.S.

and Canada are unionized.

For information regarding our continued bargaining efforts to reach an agreement with the union representing our pilots, see “ Item 1.

Business ” of this Annual Report under the caption “Federal Express Segment — Employees.” If we are unable to reach an agreement with any of our unionized work groups in future negotiations regarding the terms of their collective bargaining agreements, or if additional groups within our workforce become unionized, we may be subject to work interruptions or stoppages, which could adversely affect our business and results of operations.

Labor unions have recently attempted to organize employees at businesses and in industries that have not traditionally been unionized, and in certain instances have been successful.

and Canada, with the exception of our pilots, are not unionized (we acquired FedEx Supply Chain in 2015, which already had a small number of unionized employees).

Additionally, certain of our employees outside of the United States and Canada are unionized.

For information regarding our agreement with the union representing our pilots, see “ Item 1.

Business ” under the caption “Business Segments – Federal Express” and Note 20 of the consolidated financial statements included in “ Item 8.

Financial Statements and Supplementary Data ” of this Annual Report.

If we are unable to reach an agreement with any of our unionized work groups in future negotiations regarding the terms of their collective bargaining agreements, or if additional groups within our workforce become

unionized, we may be subject to actual or threatened strikes, work interruptions or stoppages, which could materially and adversely affect our business, financial condition, cash flows, and results of operations.

Labor unions have continued to make attempts to organize employees at businesses and in industries that have not traditionally been unionized, and in certain instances have been successful.

Such attempts could continue in 2027.

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Congress has, in the past, considered adopting changes in labor laws that would make it easier for unions to organize units of our employees.

For example, there is always a possibility that legislative or administrative actions, or judicial decisions, could attempt to remove Federal Express employees from the jurisdiction of the RLA.

Additionally, this jurisdiction could be challenged in connection with our recently completed one FedEx consolidation and ongoing Network 2.0 transformation.

For example, there is always a possibility that legislative or administrative actions, or judicial decisions, could attempt to remove our employees from the jurisdiction of the RLA.

Additionally, this jurisdiction could be challenged in connection with our recently completed one FedEx consolidation and ongoing Network 2.0 transformation initiative.

For additional discussion of the RLA, see “ Item 1.

Business ” of this Annual Report under the caption “Regulation.” Such legislation or challenge could expose our customers to the type

of service disruptions that the RLA was designed to prevent — local work stoppages in key areas that interrupt the timely flow of shipments of time-sensitive, high-value goods throughout our global network.

Business ” of this Annual Report under the caption “Regulation.” Such legislation or challenge could expose our customers to the type of service disruptions that the RLA was designed to prevent – local work stoppages in key areas that interrupt the timely flow of shipments of time-sensitive, high-value goods throughout our global network.

Such disruptions could threaten our ability to provide competitively priced shipping options and ready access to global markets.

There is also the possibility that Congress could pass other labor legislation that could adversely affect our operations with employees governed by the NLRA.

There is also the possibility that Congress could pass other labor legislation that could materially and adversely affect our operations with employees governed by the NLRA.

In addition, the NMB and the NLRB have and may continue to take actions that could make it easier for our employees, as well as vendor, service provider, and supplier workforces, to organize under the RLA or NLRA.

Finally, changes to federal or state laws, regulations, rules, judicial or administrative precedent, or guidance governing employee classification could affect the status of service providers as independent employers of their drivers.

If we are deemed to be an employer or joint employer of the drivers of these service providers, labor organizations could more easily organize these individuals, our operating costs could increase materially, and we could incur significant capital outlays and experience adverse effects to service levels.

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 adversely affect our business and results of operations.

Finally, changes to federal or state laws, regulations, rules, judicial or administrative precedent, decisions or guidance governing employee classification could affect the status of service providers as independent employers of their drivers.

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 and adversely affect our business and results of operations.

Our success depends upon the efforts and abilities of our high-quality employees, many of whom are longstanding FedEx team members.

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the unexpected loss of such individuals resulting in the depletion of our institutional knowledge base;

and/or our inability to successfully transition key roles could have an adverse effect on our business, results of operations, reputation, and the price of our common stock.

We also regularly seek to hire a large number of part-time and seasonal workers, and utilize service providers to conduct certain linehaul and pickup-and-delivery operations.

and/or our inability to successfully transition key roles could materially and adversely affect our business, results of operations, reputation, and the price of our common stock.

To meet operational needs and service standards, we regularly seek to hire a large number of part-time and seasonal workers in our stations and hubs, and to contract service providers that conduct linehaul and pickup-and-delivery services.

Certain positions at FedEx have historically experienced high turnover rates, which can lead to increased recruiting, training, and retention costs.

Additionally, our company culture is important to providing high-quality customer service and having a productive workforce and could be adversely affected by our evolving operations and other factors.

If we fail to maintain the strength of our company culture, our competitive ability and our business may be harmed.

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 service providers and persons in the markets where we and our service providers operate and unemployment levels within these markets, prevailing and competitive wage rates and other benefits, health and other insurance costs, inflation, fuel and energy prices and availability, behavioral changes, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety, and security levels of our operations, our reputation within the labor and transportation markets, changes in the business or financial soundness of service providers, interest in contracting with FedEx, and the effect of a widespread public health crisis.

Additionally, certain service providers (acting collectively or in coordination in some instances) may seek to increase financial rates or modify contract terms and may refuse to provide service to FedEx.

Our inability to effectively meet our labor and purchased transportation needs can increase our costs, hinder our ability to execute our business strategy, negatively affect service levels, and adversely affect our business and results of operations.

Certain of these risks may be heightened by our DRIVE transformation, including Network 2.0, and the planned spin-off of FedEx Freight.

Additionally, our culture is important to providing high-quality customer service and having a productive workforce and could be materially and adversely affected by our evolving operations and other factors.

If we fail to maintain the strength of our culture, our competitive ability and our business may be harmed.

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 service providers and persons in the markets where we and our service providers operate and unemployment levels within these markets, prevailing and competitive wage rates and other benefits, health and other insurance costs, inflation, fuel and energy prices and availability, behavioral changes, adoption of new or revised employment and labor laws and regulations (including increased minimum wage requirements) or government programs, safety, and security levels of our operations, our reputation within the labor and transportation markets, changes in the business or financial soundness of service providers, interest in contracting with FedEx, and the effect of a widespread public health crisis.

Our inability to effectively meet our labor and purchased transportation needs can increase our costs, hinder our ability to execute our business strategy, negatively affect service levels, and could materially and adversely affect our business, financial condition, cash flows, and results of operations.

Certain of these risks may be heightened by our transformation initiatives.

In connection with the Spin-Off, we experienced and continue to experience changes in personnel and management that may involve organizational disruption and uncertainty.

These changes have the potential to disrupt our business.

If we fail to manage these changes successfully, we could experience significant delays or difficulty in the achievement of our strategic objectives and our business, financial condition and results of operations could be materially and adversely harmed.

We contract with service providers to conduct certain linehaul and pickup-and-delivery operations, and the status of these service providers as direct and exclusive employers of drivers providing these services is being challenged.

We are defending joint-employer cases where it is alleged that we should be treated as an employer or joint employer of the drivers employed by service providers with whom we contract to conduct certain linehaul and pickup-and-delivery operations.

We incur certain costs, including legal fees, in defending the status of service providers as direct and exclusive employers of their drivers.

We incur certain costs, including legal fees, in

defending the status of service providers as direct and exclusive employers of their drivers.

We continue to believe that we are not an employer or joint employer of the drivers of these independent businesses.

However, adverse determinations in these matters or regulatory developments could, among other things, entitle service providers’ drivers to certain wage payments and penalties from the service providers and FedEx, and result in employment and withholding tax and benefit liability for FedEx.

The status of the drivers employed by these service providers could be further challenged in connection with Network 2.0.

However, adverse determinations in these matters or regulatory developments could, among other things, entitle service providers’ drivers to certain wage payments and penalties from the service providers and us, and result in wages, overtime, penalties, withholding tax and benefits, and other employment-related liabilities for us.

The status of the drivers employed by these service providers could be further challenged in connection with Network 2.0 transformation.

Potential changes to pilot flight and duty time regulations could impair our operations and impose substantial costs on us .

In 2010, the FAA proposed regulations that would change the flight and duty time rules applicable to all-cargo air carriers.

When the FAA issued final regulations in 2011 (the “2011 regulations”), all-cargo carriers, including FedEx, were exempt from these new requirements.

When the FAA issued final regulations in 2011 (the “2011 regulations”), all-cargo carriers, including Federal Express, were exempt from these new requirements.

Instead, all-cargo carriers were required to continue complying with previously enacted flight and duty time rules and allowed to pursue the development of fatigue risk management systems to develop fatigue mitigations unique to each operation.

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Congress periodically considers legislation that, if adopted, would require all-cargo carriers to comply with the 2011 regulations.

Required compliance with the 2011 regulations would make it more difficult to avoid pilot fatigue and could impose substantial costs on us in order to maintain operational reliability.

Increasing costs, the volatility of costs and funding requirements, and other legal mandates for employee benefits, especially pension and healthcare benefits, could adversely affect our results of operations, financial condition, and liquidity.

Required compliance with the 2011 regulations could impose substantial costs on us in order to maintain operational reliability and manage pilot fatigue.

Increasing costs, the volatility of costs and funding requirements, and other legal mandates for employee benefits, especially pension and healthcare benefits, could materially and adversely affect our results of operations, financial condition, and liquidity.

We sponsor programs that provide retirement benefits to most of our employees.

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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 and other postretirement plans, if not offset or mitigated by a decline in plan liabilities, could increase pension and other postretirement expense, and we could be required from time to time to fund the pension plans with significant amounts of cash.

Such cash funding obligations could adversely affect our results of operations and liquidity.

Such cash funding obligations could materially and adversely affect our results of operations and liquidity.

Additionally, the rules for pension and retirement benefit plan accounting are complex, involve numerous assumptions, and can produce volatility in our results of operations, financial condition, and liquidity.

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Until the timing, scope, and extent of such possible regulation becomes known, we cannot predict its effect on our cost structure or our operating results.

It is reasonably possible, however, that it could materially increase our operating expenses and have an adverse direct or indirect effect on our business, if instituted.

It is reasonably possible, however, that it could materially increase our operating expenses and directly or indirectly materially and adversely affect our business, if instituted.

For additional discussion of regulatory responses to climate change, including CORSIA and the Paris climate accord, see “ Item 1.

Business ” of this Annual Report under the caption “Regulation.”

We may also incur additional expenses as a result of new or expanded policies and laws in the U.S.

and abroad regarding GHG emissions and other environmental matters.

We may also incur additional expenses as a result of new or expanded policies and laws in the United States and abroad regarding GHG emissions and other environmental matters.

Furthermore, many countries and U.S.

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our ability to successfully implement our business strategy, effectively respond to changes in market dynamics and achieve the anticipated benefits and associated cost savings of such strategies and actions;

available at scale to meet the required global and regulatory demand creating intense competition that may significantly increase the costs;

the availability and cost of, and our ability to acquire, alternative fuel vehicles, alternative fuels, fuel-efficient aircraft, global electrical charging infrastructure and requisite power grid capacity, off-site renewable energy, and other materials and components, many of which are not presently in existence or available at scale to meet the required global and regulatory demand creating intense competition that may significantly increase the costs;

unforeseen production, design, operational, and technological difficulties;

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There also is a risk that any voluntary carbon credits purchased, even if accepted by regulators, could be viewed by some third parties as not sufficiently reflecting real, verifiable, and additional GHG reductions, leading to reputational harm.

T here is no assurance that we will be able to successfully execute our strategies and achieve or demonstrate progress on our calendar 2040 goal of carbon neutrality for our global operations.

Additionally, we may determine that it is in our best interests to prioritize other business, social, governance, or sustainable investments and/or initiatives (such as our DRIVE transformation program, including Network 2.0) over the achievement of our calendar 2040 goal based on economic, regulatory, or social factors, business strategy, or other reasons.

There is no assurance that we will be able to successfully execute our strategies and achieve or demonstrate progress on our calendar 2040 goal of carbon neutrality for our global operations.

Additionally, we may determine that it is in our best interests to prioritize other business, social, governance, or sustainable investments and/or initiatives (such as our transformation initiatives) over the achievement of our calendar 2040 goal based on economic, regulatory, or social factors, business strategy, or other reasons.

Failure to achieve or demonstrate progress on our calendar 2040 goal could damage our reputation and customer and other stakeholder relationships.

Further, given investors’ and other stakeholders’ increased focus related to sustainability matters, such a failure could cause large stockholders to reduce their ownership of FedEx common stock and limit our access to financing.

Such conditions could have an adverse effect on our business, results of operations, and financial condition, as well as on the price of our common stock.

Our inability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography could adversely affect our business and results of operations.

While we operate several integrated networks with assets and team members distributed throughout the world, there are concentrations of key assets and team members within our networks that are exposed to adverse weather conditions or localized risks from natural or man-made disasters such as earthquakes, volcanoes, wildfires, hurricanes, tornadoes, wind gusts, floods, severe winter weather, heat waves, extended droughts, conflicts or unrest, terrorist or other physical attacks, or other disturbances, actual or threatened.

Such conditions could materially and adversely affect our business, results of operations, and financial condition, as well as the price of our common stock.

We may be affected by harsh weather conditions, natural disasters, conflicts or other unrest, or other terrorist or other physical attacks, and our ability to quickly and effectively restore operations following adverse weather or a localized disaster or disturbance in a key geography could materially and adversely affect our business and results of operations, cash flows, and financial condition.

Our operations are exposed to adverse weather conditions and localized risks from natural or man-made disasters such as earthquakes, volcanoes, wildfires, hurricanes, tornadoes, wind gusts, floods, severe winter weather, heat waves, or extended droughts, conflicts or unrest, or subject to terrorist or other physical attacks, or other disturbances, actual or threatened.

Disruptions to government agencies or personnel (including as a result of government shutdowns), disruptions at airport facilities used by us to manage our operations, labor relations and market constraints, power supplies, fuel inventory levels or other factors could result in the cancellation or delay of a significant portion of our flights and, as a result, could materially and adversely affect our business, results of operations, cash flows, and financial condition.

Additionally, shifts in weather patterns caused by climate change could increase the frequency, severity, or duration of certain adverse weather conditions.

We may experience reduced availability and/or increases in the cost of insurance due to such changes.

Prolonged interruptions or disruptions at a key location such as our FedEx Memphis World Hub or one of our information-technology centers could adversely affect our business and results of operations.

Prolonged interruptions or disruptions at a key location such as our FedEx Memphis World Hub or one of our information-technology centers could materially and adversely affect our business, financial condition, cash flows and results of operations.

We also may incur significant costs to reestablish or relocate these functions.

Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could adversely affect demand for our services resulting in an adverse effect on our business and results of operations.

Moreover, resulting economic dislocations, including supply chain and fuel disruptions, could materially and adversely affect demand for our services resulting in a material and adverse effect on our business, financial condition, cash flows and results of operations.

Other Legal, Regulatory, and Miscellaneous Risks

Government regulation and enforcement are evolving and unfavorable changes could harm our business.

We are subject to regulation under a wide variety of U.S.

federal, state, and local and non-U.S.

government regulations, laws, policies, enforcement priorities, and actions (including through executive orders and investigations).

There can be no assurance that such regulations, laws, policies, enforcement priorities, and actions will not be changed, or implemented, in ways that will decrease the demand for, or affect the provision of, our services, subject us to escalating costs, affect our reputation, or require us to modify our business models and objectives (such as our DRIVE transformation program, including Network 2.0 and Tricolor, or the planned spin-off of FedEx Freight), harming our financial results.

In particular, legislative, executive, regulatory or other actions that U.S.

governments have undertaken or could take in areas such as data privacy and sovereignty, the use of artificial intelligence and other emerging technologies, taxes, foreign exchange intervention in response to currency volatility, currency controls that could restrict the movement of liquidity from particular jurisdictions, trade controls, tariffs, quotas, embargoes, or sanctions in the U.S.

or other countries, complex economic sanctions, import and export controls, customs standards, additional security or workplace and transportation health and safety requirements, labor and employment standards (including with respect to our pilots and our service providers and their employees), enforcement of civil rights laws (including Title VII of the Civil Rights Act of 1964) in the United States, scrutiny of human resources policies and practices, challenges to diversity-related initiatives, False Claims Act, immigration and worker eligibility standards, worker classification, joint employment and benefits, government contracting, antitrust, regulated commodities, environmental, climate-related, or emission standards, and accounting may have an adverse effect on our results of operations, financial results or condition, capital requirements, effective tax rate, and service levels.

Furthermore, some of our operations are in high-risk legal compliance environments, and the Foreign Corrupt Practices Act (the “FCPA”), similar anti-bribery laws in non-U.S.

jurisdictions, and other compliance-related laws or regulations could result in litigation, investigations, assessment of damages, imposition of penalties, or other consequences.

We are subject to regulation under a wide variety of United States federal, state, and local and non-United States government regulations, laws, policies, enforcement priorities, and actions (including through executive orders and investigations).

There can be no assurance that such regulations, laws, policies, enforcement priorities, and actions will not be changed, or implemented, in ways that will decrease the demand for, or affect the provision of, our services, subject us to increased or unexpected costs, affect our reputation, or require us to modify our business models and objectives (such as our transformation initiatives), harming our financial results.

In particular, legislative, executive, regulatory, judicial or other actions that the United States and non-United States governments have undertaken or could undertake, including in areas such as data privacy and sovereignty, the use of AI and other emerging technologies, taxes, foreign exchange intervention in response to currency volatility, currency controls that could restrict the movement of liquidity from particular jurisdictions, trade controls, tariffs, quotas, embargoes, or sanctions in the United States or other countries, complex economic sanctions, import and export controls, customs standards, additional security or workplace and transportation health and safety requirements, labor and employment standards (including with respect to our pilots and our service providers and their employees), enforcement of civil rights laws (such as Title VII of the Civil Rights Act of 1964) in the United States, scrutiny of human resources policies and practices, challenges to diversity-related initiatives, False Claims Act, expanded obligations under state or federal wage and hour laws, immigration and worker eligibility standards, limitations on the ability to perform work in certain locations, prohibitions against vendor or service provider engagements, worker classification, joint employment standards and liability, government contracting, state and federal antitrust, regulated commodities, environmental, climate-related, or emission standards, and accounting materially and adversely affect our results of operations, transformation initiatives, financial results or condition, capital requirements, effective tax rate, and service levels.

Furthermore, some of our operations are in high-risk legal compliance environments, and the Foreign Corrupt Practices Act (the “FCPA”), similar anti-bribery laws in non-United States jurisdictions, and other compliance-related laws or regulations could result in litigation, investigations, assessment of damages, imposition of penalties, or other consequences.

For additional discussion, see “ Item 1.

Business ” of this Annual Report

under the caption “Regulation.” Additionally, in light of the recently held elections in the United States and various international jurisdictions and recent executive orders in the United States, there is considerable uncertainty regarding changes to various aspects of existing laws, regulations, and enforcement priorities and strategies that could affect trade policies, labor matters, human resources and related policies and practices, immigration, taxes, and technological advancements, among other areas, and have a material effect on our business and results of operations, as well as on the price of our common stock.

Business ” of this Annual Report under the caption “Regulation.” Additionally, in light of the recently held and upcoming elections in the United States and various international jurisdictions and the issuance of Executive Orders in the United States, including those which are being litigated or courts have held are not supported by law, have caused and may continue to cause considerable uncertainty regarding changes to various aspects of existing laws, regulations, and enforcement priorities and strategies that could affect trade policies, labor matters, human resources and related policies and practices, immigration, taxes, and technological advancements, among other areas, and have a material effect on our business and results of operations, as well as on the price of our common stock.

We could be subject to adverse changes in regulations and interpretations or challenges to our tax positions.

We are subject to taxation in the U.S.

and numerous foreign jurisdictions.

We are subject to taxation in the United States and numerous foreign jurisdictions.

From time to time, changes in tax laws or regulations may be enacted that could significantly affect our overall tax liabilities and our effective tax rate.

and foreign governmental agencies maintain focus on the taxation of multinational companies, including statutory tax rates, digital taxes, global minimum taxes (such as the framework agreed to by members of the Organization for Economic Cooperation and Development), and transactions between affiliated companies.

United States and foreign governmental agencies maintain focus on the taxation of multinational companies, including statutory tax rates, digital taxes, global minimum taxes (such as the framework agreed to by members of the Organization for Economic Cooperation and Development), and transactions between affiliated companies.

Such changes may require new and complex computations to be performed, significant judgments, estimates, and calculations to be made, and the preparation and analysis of information not previously relevant or regularly produced.

Standard-setting bodies could interpret or issue guidance on how provisions of certain tax laws and regulations will be applied or otherwise administered that is different from our interpretation, and we may be required to make adjustments to amounts that we have recorded that may adversely affect our results of operations and financial condition.

Standard-setting bodies could interpret or issue guidance on how provisions of certain tax laws and regulations will be applied or otherwise administered that is different from our interpretation, and we may be required to make adjustments to amounts that we have recorded that may materially and adversely affect our business, financial condition, cash flows, and results of operations.

See “ Item 7.

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Management’s Discussion and Analysis of Results of Operations and Financial Condition—Critical Accounting Estimates - Income Taxes ” of this Annual Report for information regarding estimates and potential adjustments related to our tax positions.

Our business is subject to complex and evolving U.S.

and foreign laws and regulations regarding data protection.

There has recently been heightened regulatory and enforcement focus relating to the collection, use, retention, transfer, and processing of personal data in the U.S.

(at both the state and federal level) and internationally, including the EU’s General Data Protection Regulation, the U.S.

executive order relating to sharing information with China and other covered countries, the California Privacy Rights Act, the Virginia Consumer Data Protection Act, and other similar laws that have been or will be enacted by other jurisdictions.

In addition, in the U.S.

and internationally, there has been increased legislative and regulatory activity related to artificial intelligence and the risks and challenges artificial intelligence poses, including the European Union’s Artificial Intelligence Act, the Colorado AI Act, and other similar state laws that have been or will be enacted.

Our business is subject to complex and evolving United States and foreign laws and regulations regarding data protection and cybersecurity, which impose significant costs and regulatory risks that are likely to increase over time.

There has recently been heightened regulatory and enforcement focus relating to the collection, use, storage, retention, transfer, and processing of personal data in the United States (at both the state and federal level) and internationally, including the EU’s General Data Protection Regulation, the United States executive order relating to sharing information with China and other covered countries, the California Consumer Privacy Act (as amended by the California Privacy Rights Act, the “CCPA”), the Virginia Consumer Data Protection Act, the Canada Personal Information Protection and Electronic Documents Act (“PIPEDA”), and other similar laws that have been or will be enacted by other jurisdictions.

In addition, in the United States and internationally, there has been increased legislative and regulatory activity related to Cybersecurity and AI and the risks and challenges AI poses, including the European Union’s Artificial Intelligence Act, the Colorado AI Act, and other similar state laws that have been or will be enacted.

Also, China and certain other jurisdictions have enacted more stringent data localization requirements.

An actual or alleged failure to comply with applicable U.S.

or foreign data protection laws, regulations, or other data protection standards may expose us to litigation (including, in some instances, class action litigation), fines, sanctions, or other penalties, which could harm our reputation and adversely affect our business, results of operations, and financial condition.

An actual or alleged failure to comply with applicable United States or foreign data protection laws, regulations, or other data protection standards or cybersecurity regulations may expose us or our applicable third-party providers to litigation (including, in some instances, class action litigation), fines, sanctions, or other penalties, which could

materially and adversely affect our business, reputation, results of operations, cash flows, and financial condition.

This regulatory environment is increasingly challenging, based on discretionary factors, and difficult to predict.

Consequently, compliance with all applicable regulations in the various jurisdictions in which we do business may present material obligations and risks to our business, including significantly expanded compliance burdens, costs, and enforcement risks;

require us to make extensive system or operational changes;

or adversely affect the cost or attractiveness of the services we offer.

Consequently, compliance with all applicable regulations in the various jurisdictions in which we do business may present material obligations and risks to our business, including:

significantly expanded compliance burdens, costs, and enforcement risks;

extensive system or operational changes;

or increased costs and/or reduced attractiveness of the services we offer.

All of these evolving compliance and operational requirements, as well as the uncertain interpretation and enforcement of laws, impose significant costs and regulatory risks that are likely to increase over time.

Developing privacy legislation within the U.S.

may also create limitations or added requirements on the use of personal data by FedEx Dataworks and the other FedEx operating companies.

Developing privacy and AI legislation within the United States and in other jurisdictions may also create limitations or added requirements on the use of personal data by FedEx Dataworks and the other FedEx operating companies.

The regulatory environment for global aviation or other transportation rights may affect our operations and increase our operating costs.

Our extensive air network is critical to our success.

Our right to serve foreign points is subject to the approval of the DOT and generally requires a bilateral agreement between the U.S.

and foreign governments.

Our right to serve foreign points is subject to the approval of the DOT and generally requires a bilateral agreement between the United States and foreign governments.

In addition, we must obtain the permission of foreign governments to provide specific flights and services.

Our operations outside of the U.S., such as FedEx’s international domestic operations, are also subject to current and potential regulations, including certain postal regulations and licensing requirements, that restrict, make difficult, and sometimes prohibit, the ability of foreign-owned companies such as FedEx to compete effectively in parts of the international domestic transportation and logistics market.

Our operations outside of the United States, such as FedEx’s international domestic operations, are also subject to current and potential regulations, including certain postal regulations and licensing requirements, that restrict, make difficult, and sometimes prohibit, the ability of foreign-owned companies such as FedEx to compete effectively in parts of the international domestic transportation and logistics market.

Regulatory or executive actions affecting global aviation or transportation rights or a failure to obtain or maintain aviation or other transportation rights in important international markets could impair our ability to operate our networks.

Further, our ability to obtain or maintain aviation or other transportation rights internationally may be adversely affected by changes in international trade policies and relations.

Further, our ability to obtain or maintain aviation or other transportation rights internationally may be materially and adversely affected by changes in international trade policies and relations.

We are subject to other extensive regulatory and legal compliance requirements that may result in significant costs.

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These requirements can be issued with little or no notice, or can otherwise affect our ability to efficiently or fully utilize our aircraft, and in some instances have resulted in the temporary grounding of aircraft types altogether.

Further, our business may be adversely affected when governmental agencies and air traffic control and other systems they oversee cease to operate as expected, including due to partial shutdowns, sequestrations, or similar events.

Further, our business may be materially and adversely affected when governmental agencies and air traffic control and other systems they oversee cease to operate as expected, including due to partial shutdowns, sequestrations, or similar events.

Lapses in government operations may result in, among other things, disruptions in the ability of governmental agencies to grant required regulatory approvals.

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We are also subject to other risks and uncertainties, including:

• our ability to mitigate the technological, operational, legal and regulatory, and reputational risks related to autonomous technology and artificial intelligence;

• the increasing costs of compliance with federal, state, and foreign governmental agency mandates (including the FCPA and the U.K.

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• loss or delay in the collection of accounts receivable;

• any liability resulting from and the costs of defending against class-action, derivative, and other litigation, such as wage-and-hour, joint employment, securities, vehicle accident, and discrimination and retaliation claims, claims related to our reporting and disclosure of sustainability topics, and any other legal or governmental proceedings, including the matters discussed in No te 21 of the consolidated financial statements included in “ Item 8.

• any liability resulting from and the costs of defending against class-action, derivative, and other litigation, such as wage-and-hour, joint employment, securities, vehicle accident, and discrimination and retaliation claims, claims related to our reporting and disclosure of sustainability topics, and any other legal or governmental proceedings, including the matters discussed in Note 19 of the consolidated financial statements included in “ Item 8.

Financial Statements and Supplementary Data ” of this Annual Report;

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• various types of fraud with respect to unauthorized uses of another person’s identity;

• the effect of technology developments (including artificial intelligence and machine learning) on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information-technology redundancy and complexity throughout the organization;

• disruptions in global supply chains, which can limit the access of FedEx and our service providers to vehicles and other key capital resources and increase our costs;

• the effect of technology developments (including AI and machine learning) on our operations and on demand for our services, and our ability to continue to identify and eliminate unnecessary information-technology redundancy and complexity throughout the organization;

• disruptions in global supply chains, which can limit the access of Federal Express and our service providers to vehicles and other key capital resources and increase our costs;

• difficulties experienced by the companies with which we contract to fly smaller regional “feeder” aircraft in attracting and retaining pilots, which could cause a reduction of service offered to certain locations, service disruptions, increased costs of operations, and other difficulties;

• governmental underinvestment in transportation infrastructure, which could increase our costs and adversely affect our service levels due to traffic congestion, prolonged closure of key thoroughfares, or sub-optimal routing of our vehicles and aircraft;

• governmental underinvestment in transportation infrastructure, which could increase our costs and materially and adversely affect our service levels due to traffic congestion, prolonged closure of key thoroughfares, or sub-optimal routing of our vehicles and aircraft;

• stockholder activism, which could divert the attention of management and our Board of Directors from our business, hinder execution of our business strategy, give rise to perceived uncertainties as to our future, and cause the price of our common stock to fluctuate significantly;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors