“As a reminder, small upticks in B2B revenues can result in significant incremental flow through. So if we see a recovery in the industrial economy, we're well positioned to see strong leverage to operating income.”

In context

“cific lane. Lastly, we anticipate a $120 million headwind from the expiration of the US Postal Service contract. Partially offsetting these headwinds is $200 million of benefit from our transformation initiatives. Now turning to some important considerations for FY '26. We expect around $1 billion in incremental year-over-year benefit from our transformation-related efforts, which includes structural cost reduction benefits from Drive and Network 2.0. We anticipate a moderate ramp of these savings throughout the fiscal year. In addition, the US Postal Service contract expiration will be a near-term headwind. For modeling purposes, I want to note that this significant revenue and operating income headwind is limited to the first four months of FY '26 and likely to skew typical seasonality. As a reminder, small upticks in B2B revenues can result in significant incremental flow through. So if we see a recovery in the industrial economy, we're well positioned to see strong leverage to operating income. In addition to our Q1 outlook, we remain committed to being transparent and resuming our full-year outlook for adjusted EPS, effective tax rate, and capital returns as visibility improves. Now that we're into a new fiscal year, we're very excited about the significant value creation opportunities ahead for both FedEx Corporation and the future standalone FedEx Freight Company. In that regard, we plan to host a FedEx Corporation Investor Day in Memphis in early calendar 2026, where we'll share more details on our long-term strategy. This will include a detailed update on our strategic initiatives integration, such as Network 2.0, which represents a $2 billion savings opportunity from our physical network integration and associated OneFedEx savings by the end of fiscal 2027. Additionally, w”