We're good? All right, great. Everybody, thanks for, thanks for, joining us. Sorry for the delay. Thanks for taking time out of your schedules. I know it's always tough to stay late and stay for dinner, so truly appreciate everybody joining us. So good evening, everyone. Welcome to the start of our 31st annual BofA Transportation, Airlines, and Industrials Conference. This is the 23rd one that I've hosted. I am Ken Hoexter, BofA's Air Freight and Surface Transportation and Shipping or Marine Analyst. We kick off our event with dinner with FedEx, which has been a nice tradition for us to start the conference over the past dozen or so years. So really appreciate FedEx's joining us for much of that time. We're here along with John Dietrich, EVP and CFO. John's first time joining us at the conference, having been named CFO last August. Also joined by FedEx's IR team, including Jeni Hollander and Steve Hughes. On the stage, Matt DeBerry in the audience. Jeni joined FedEx as VP of IR on March first. Steve Hughes has been a part of the IR team for 25 years, plus years. We welcome FedEx for the 10th time in our years hosting the event. Steve, for your 6th time here, only four more times, and you get the coveted 10-timer jacket. I can't wait. So thank you. Matt and Jeni's first time here as well. So we've got a lot to unpack tonight with DRIVE Network 2.0, Tricolor, new management team, new reporting structure, with One FedEx and more. So with that, I know they've got a brief Reg FD intro. So- Yep ... Jeni, I'll turn it over to you. But while I do that, I'll turn it over to you to do the Reg FD, and let me just open up with the first question so John can- Sure. Can just jump in. So just I'll turn it over to you for a few-minute intro, overview. You hosted your first analyst conference in 10 years, nearly a year ago. As I noted, a lot of change going on at FedEx, but as you answer kind of what's going on in the update, just throw in maybe three key takeaways we should leave with today. So with that, Jeni- Yeah. Turn it over to you. Thanks, Ken. Yeah, so the obligatory disclaimer, certain statements made today, such as projections regarding future performance, may be considered forward-looking statements. Such forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and filings with the SEC. Please refer to the investor relations portion of our website at fedex.com for a reconciliation of the non-GAAP financial measures discussed today to the most directly comparable GAAP measures. With that, I will pass it over to John. Great. Thank you all, Jeni, and Ken, thanks so much for this opportunity, and thank you all for your patience. I really apologize I was late, but it's great to be here. I'm really excited to be part of the FedEx story right now. As Ken, you mentioned, I've been with the company now for just over nine months, and you know, I couldn't be happier with my decision to come to the company. I mean, you touched on some of the significant initiatives we have going, our DRIVE initiative as we work towards Network 2.0, and something that's even more imminent is our June 1 pivot to One FedEx. So we're in the midst of all this, so a lot happening at the company. And so, you know, when you talk about what are some of the takeaways, the top three, I guess what I would tell you is, DRIVE is real and it's working. Network 2.0 is going to be the future, and right now we are really bucking the trend in the industry. We are. If you look at our results in an environment where we're down in terms of revenue, we're up year-over-year in terms of margin and op income, and that's a great story. I think we're the only one in the industry doing that right now, which really speaks to the benefits of DRIVE and the rigor behind it, even in a depressed market. Great. Great, thank you. So I'm gonna jump into some numbers right, right at the start, right, so we knock off the numerical portion of- Mm-hmm ... what everybody- Mm kind of wants to hear, right? So you reiterated your target for earnings of $17.25-$18.25, which means fourth quarter, which you're coming up on $4.84-$5.84. That's a pretty big 20% earnings range as we close in on year-end. Thoughts on why such a big window as we close out the year, and what were you considering when you thought upside, downside in that range? Sure. Well, first of all, I'd like to address, you know, the midpoint of the range that's actually higher than when we came into the year back in June, what we reported. So you know, we were excited throughout the year to be able to narrow the range to the extent we did, but also, you know, we're able to take into account the environment we're in. It's an uncertain market, so we've been looking at those things within our control and some of the variables that may not necessarily be within our control as we kind of prudently approached our guidance. And, when you look at the results, again, you may hear me say this a few times, but three quarters in a row with down revenue, with up op income and increased operating margin on a consolidated basis. So we just wanted to take a cautious approach on our guidance and are focused on delivering and finishing out the year strong. Okay. And just to follow up on that, thoughts on what drives upside, downside? Is it just... Are we talking just volumes at this point? Is it, is there cost, delayed cost takeout? What's your thought on the upside? Yeah, I think we're well positioned, if the market is more favorable than it is today. We were not counting on that. Yeah. So, you know, if we see some bright spots in the market, I think we have some potential upside. And as I say that, I think given the steps we're taking now and the leverage we're generating by bringing it all together under One FedEx. I think that's gonna continue to be true in the future. I think we're putting ourselves in a position to really capitalize on a stronger market, which we're simply not seeing right now. Okay. Just to harp on that for a second. You know, we look at from an industrial materials sector over in our research and listening to the consumer team. Seems like they're talking about a kind of a deteriorating environment. I know you don't give intra-quarter updates, but is there something going on in the consumer that you're seeing in the backdrop that seems to be decelerating at this point? You know, I'm gonna look to where we've been and what we've been keeping our eye on. You know, in terms of industrial production, you know, was down year-over-year, about 1.9%. And so, we're not seeing much improvement, I guess, is what I would say. You know, on the parcel side, we saw a little bit of calendar year, fourth quarter improvement for the first time in a while. And but we're watching it very closely, and as you say, I'm not in a position to kind of update our guidance. But, I mean, you all see what's happening in the world today. It's a crazy world that we're living in. The market, you know, is again uncertain, and we're just focusing on those things within our control. Okay. Let's talk about a lot of those things in your control. Actually, I want to talk about one maybe out of your control. Your peer at the Analyst Day they hosted a little while ago talked about 12 million average daily volume capacity surplus in the U.S. small package market, half of which resides at the post office. How do you view the current level of excess capacity at FedEx? And what's the normal run rate of excess capacity you would keep in the network at any given time? Yeah, I think, a lot of that excess capacity, as you said, is with regard to the USPS, and with regard to, you know, lightweight, which is really not our core business. So you know, from our standpoint, I don't know that there's a new normal, in terms of excess capacity. What I can say is we're doing everything in our control to rationalize our capacity with the volumes and the demand we're seeing, across all our opcos, and we'll continue to do that. I think the USPS situation will allow us to better adapt, to a changing environment in the market, because we will not be as wedded to the daytime operations under the postal service contract as it exists today. Okay. We definitely want to hit on, on kind of how DRIVE and Tricolor initiatives fit in, in right-sizing the network. Is there... We'll delve into DRIVE in a bit, but in, in a big picture, is there a way you look at DRIVE and Tricolor as, as far as starting that right-sizing of the network? Yeah. I'm actually excited about Tricolor, because it also taps into a market that I was familiar with from my prior experience. But Tricolor is all about aligning our network with the products and the demand environment that's out there. Purple designed to really leverage the Priority Express product, largely parcel. And to focus on not only that parcel delivery, but also to maximize density on our Purple Tails. The Orange Network is also on FedEx aircraft, but it's off cycle, and not in the express hours of the night, but more during daytime operations, where we can take the time to gather the freight and focus on priority international freight. That's kind of parlayed—what I'll say is parlayed with parcel add-on to maximize our density on the Orange Network. And then the White Network is really our belly capacity that's focused on things like e-commerce and deferred freight. That will lend itself to more point-to-point operations, leveraging the, you know, significant belly capacity that's out there into main markets, where we can offload from the bellies and integrate it into our Ground network here in the U.S. Wonderful. We'll definitely dig into some more of that, 'cause it's- Yeah ... really interesting stuff. But I wanted to jump to One FedEx, right, which is kind of your new reporting structure. I think you still will still get the same revenue and volume data as analysts, but no more Ground and Express divisional margins, as far as I understand it, right? So some would voice skepticism that the loss of details that we should be concerned. You would tell us, don't be concerned, 'cause it's just it's the ability to operate the company differently. So maybe tell us why One FedEx is an important step in how you look at the business. Well, from my perspective, as you look at the consolidated operation, we're focused on doing the best by our customers and the best by our network, and sometimes that's trade-offs between the various factions of our operation. Not to be overly focused in any one area, but what's in the best interest of the business, and we believe all the consolidation that we're doing with regard to One FedEx, bringing Ground and Express together, and also leveraging our significant LTL Freight network, will allow us to do that. And that's a huge reason why we're moving forward in this direction. I also think we're gonna provide enough data for you all to follow the various products. We haven't announced specifically what our segment reporting will be, but we'll continue to provide information on yields and volumes, so that, you know, you all can do the work that you do. Okay. All right, let's talk about DRIVE. Let's start with DRIVE, 'cause that's what's the current program. So you're in the midst of a $4 billion DRIVE program. You got $1.8 billion this year, $2.2 billion next year. You know, maybe just walk us through the quarterly that you've done so far, and then whether we should see that accelerate. Well, I guess we have to see it accelerate if you've got bigger numbers into next year. Yeah, roughly in Q3, we were at $550 million that we announced in terms of DRIVE results. Q2, at somewhere in the neighborhood of $450 million. And on the ground side for Q1, it was the only thing we published, was about $130 million. So we're making very good progress, and I'm here to, you know, affirm that we are going to meet our $1.8 billion that we committed to the street. Really excited about that. A lot of. It was one of the things that attracted me to the company was to see where we are in this process, a tremendous amount of rigor. When we launched DRIVE, there's a significant investment in the processes and procedures that we were looking at and the integration we were looking at. When I came on board, a lot of that heavy lifting had already been done, and we're in our execution phase right now, which ties into next year in FY 2025. We have the $2.2 billion that we're looking to achieve, and that all is kind of a progression of some of the programs that are already in place that are going to get more and more traction full year, and other new programs that, for example, a lot of our G&A and procurement are kind of back-end loaded. So, we're excited about going after that 2.2 in FY 2025. So I think that 2.2 has a lot of debate around it, right? Because now you've got the loss of the Postal Service contract, you've got other things that are countering the 2.2. Is there a number that you can talk to or walk us through how we should think about what of that 2.2 can fall through down to the bottom line? Well, you're certainly, you're certainly right. There are a lot of factors that are, you know, causing some of that not to flow through. I mean, we have a depressed demand environment. Yields are softening or have softened, I should say that. You know, some of the demand surcharges that we had enjoyed before are no longer in play, and we shouldn't see as much of a headwind on that in FY 2025. The Postal Service, you're right, that's a headwind as well. And then, you know, you recall, as we reported, there's roughly $800 million of shift in mix from Priority to Economy. That also was a headwind for us. So it's not all going to flow through, but we are focused on having as much, I think I said this in, in our last earnings call, as much of that flow through as possible. I'm not going to give you a number. I can't give you a number right now, but what I can tell you is we're focused on it, and I'll look forward to giving you all an update on FY 2025, you know, in, in June. So, but the goal would be to see still, you're countering the increased costs or loss of postal business or whatever, with some of that 2.2 continuing to flow through. Just a question of how much. What I can tell you is that the 2.2, when we talk about that, and we talk about the 1.8, is structural in nature. Mm-hmm ... and not kind of variable, or yield-driven. These are structural changes that we're making to deliver on that. Is all of it going to flow through in FY 2025? I can't sit here and say that. What I can say is my goal is to see as much of that flow through as possible. Can you maybe remind the audience a little bit about the breakdown of DRIVE, in terms of we did it by year, right? Now, maybe by sector, air, you know, how we should think about what's going on in Europe, what's going on in G&A, what's going on in surface transportation. Are there buckets that we can- Yeah We can start to think about? The three main buckets are air and international, ground, surface, and G&A. And on the air and international, $1.3 billion made up of $700 million of air and $600 million in Europe. Mm-hmm. And then, Steve, keeping honest here on the ground and surface on the one point- 1.2. 1.2. Ground surface transportation. Yeah. And 1.5- And 1.5 in G&A, yeah. And then of that, maybe just take a deeper dive into Europe, right? Because we all watched acquired TNT, integration of TNT, elimination of the second air network. Where are the savings—like, how should we think about those savings flowing? Yeah, we're. Look, Europe is a real opportunity for us. We're taking a fresh look, not only kind of the prior implementation and integration plans with TNT, which existed before I arrived, but now I think there's even more opportunity to look at every aspect of what we're doing in Europe. G&A, for sure, is going to be part of it. Using some of the lessons we've learned in DRIVE in the U.S. on our ground, with a focus on surface first before the air network, making some changes to our air network, fly only when we need to fly. I think there's going to be more and more opportunity. Again, can't sit here and say how much of it's going to flow through. What I can say is we're focused on to the $600 million for sure, and whatever more we can get. Does Europe become profitable after that? Our focus is on making Europe profitable. Okay. When that happens, you know, we're gonna keep focused on that. Let's blend from DRIVE to Tricolor, which is part of DRIVE, right? Mm-hmm. So if I think about the better asset utilization you're talking about, maybe take what you just—you broke down- Right ... purple, orange, white into categories. Maybe talk about how we should see that, or what are—maybe just give an example or two of some programs that that Tricolor is bringing about. Yeah. As I alluded to before, I think there's a significant market that's there that we're not really participating in that's there for the taking in terms of priority freight and leveraging the significant assets we have internationally and the Ground n etwork that we have domestically to make Tricolor attractive. We're not gonna see huge results in Tricolor certainly this year and we'll see some benefits in the next year so it's gonna be some lead time to get it fully up and running. There's some investment we're making in terms of some of the White belly capacity. There's some procurement that needs to take place in order to secure those agreements with the various international carriers. But you know I'm excited about what the prospects are of that coming together. And again, as you said, it's our goal is to fully utilize our assets as best we can, focusing on the right assets for the right product, the right levels of utilization, and increased density. ... So I'm just so used to talking about when I talk about Europe and TNT, that everybody understands what the, how many people remember TNT being around as independent? Yeah, I mean, it's amazing how quick it fades, right? You know, that it's not a legacy thing. So I want to stick on Europe for one more second. In fiscal 2025 European net savings, as you rationalize sorts, optimize line, all the stuff you were talking about doing, I think that you also threw out $1 billion of G&A savings. Is that domestic G&A savings? Is that global? What's in the, maybe just give some examples of what's going on in the savings. Yeah, it's global. It's across the board. So, you know, everything on the procurement side, roughly $600 million of that is procurement. IT, we have some great opportunities on IT, and as part of our plans going forward, this doesn't all just happen. This is going to involve a significant amount of investment in IT and the digital initiatives that we have. You know, we're excited about the new leadership team that's been announced, some seasoned veteran personnel that are going to come along in conjunction with not only IT, but our Dataworks subsidiary. So, you know, we're really excited about the IT piece. So those are some of the major components. I'm gonna jump around here on my questions, but is the IT systems as you—I wanna get to Network 2.0 in a bit, but are the systems the same? Or I understand they're different, right? Ground and Express. So how much of that expenditure needs to be accomplished first before you can move and blend the networks? Yeah. And it's one of the, you know, legacies of operating separately for so long. We've had the separate opcos, and the systems are not always the same. Some are, and over time, we've integrated some systems, but there is gonna require some investment in integrating systems and kind of having some common platforms, which, on the one hand, is daunting, on the other hand, is very exciting because, you know, the opportunity it creates for us. And it's really one of the reasons why, when we're talking about things like, Network 2.0, you know, we've given ourselves some time to work towards that. We're gonna be keeping our finger on the pulse to make sure with the initiatives that we are implementing and the systems we are changing, that they're sufficiently tested and proof-tested, such that, you know, we're not gonna, in any way, jeopardize or, you know, harm the customer or our operations. So it's a joint team effort, really exciting, the work that's being done, the talent that we're able to recruit. It's something I look forward to briefing you all further on as we make progress. Certainly interesting stages ahead. Within Express, let's go back to the kind of the macro view we were talking about. U.S. package volumes have been negative for 10 consecutive quarters. We're lapping two-year stack of volumes down 20%+. Anything to suggest we're starting to see some positive comps, anything economic view or we're seeing port volumes picking up? Is there e-commerce demand that's turning? Anything that you see that shifts that comp? Yeah, it's, it's really a bit of a tale of two cities. On the e-commerce side, you know, we've seen a return of e-commerce and growth in e-commerce, actually. You know, there's this whole discussion on destocking, which is, we believe, has taken place, but we haven't seen the restocking yet. So I think that gives us some potential upside. I talked about industrial production as somewhat depressed. There could be some potential upside there. And I also mentioned, you know, calendar year, the fourth quarter, or excuse me, calendar year 2023, the fourth quarter, we did see some signs of improvement. But we're watching it closely, and look, Express continues to be an opportunity for us. Even without the market improving for us, we're gonna continue to focus on those things within our control. Tricolor is a piece of that. Some of the network redesign is going to be a piece of that. All of the DRIVE initiatives are focused on improving Express and the consolidated operation as well. So... All right. We'll definitely get to some margin discussion, too. Pricing, following that, that volume discussion, I guess the one thing we've talked about this sector, I think the last few years, which has been really a big positive, is your willingness to allow business to fall away, right? We started with Amazon. Was that 2019? 2019. Was that 2019? Yeah. The post office more recently, right, in, in terms of how would you describe the pricing environment in this backdrop? I would describe it as competitive but rational. It's you know, one of our biggest competitors you know, is going after business, and we're going after business as well. You know, I'd say it's back to kind of a normal pricing environment in a competitive market. Mm-hmm. Okay. So you've targeted Express margins to be down year-over-year from 5% a year ago, but up sequentially from 2.5% in the third quarter. So we're still talking, I think, in the backdrop, pretty low margins at this segment, which was, you know, half the company's revenues, 47% of the company's revenues. Why do we still see margins at this level? I guess that's why you've embarked on DRIVE and Tricolor. But are you still surprised at the margins being stuck at this level versus some of the programs you're putting in place? Well, as I just said, I think there's some opportunity at Express. It's a primary focus of ours. You have to also take into account all the headwinds that Express has endured. I talked about the you know, the falling away of a lot of the demand surcharges, the significant shift from priority to economy and deferred product. And those kind of variables put a tremendous amount of pressure on Express. The drag from the U.S. Postal Service business that we said was about $400 million for FY 2024. You know, all those things were hitting Express, and when you have such a large network, and want to continue to serve your customers, which we do, it takes time to adapt to that environment, and we're focused on it, and we look forward to continuing to expand the margins. Awesome. Within Ground, let's switch over to Ground for a bit. Starting with volumes, virtually, again, no growth as economy and Ground Commercial have offset Home Delivery declines. Just a statement of the economy, or is there a share shift intra-segment, intra-industry, in there? And maybe talk a little bit about your SMB focus versus enterprise focus within that. Yeah, I think, Ground is a great example of how DRIVE is really working. We've done a lot of work to maximize the efficiency of Ground. We've been able to capitalize and bring our total line haul costs down and absorb some of the, what was previously ad hoc, line haul expense into our network, which is all part of DRIVE and the technologies that we're implementing in DRIVE. And, you know, the demand environment, we're going to continue to go after some of the things you talked about, SMB business, as well as healthcare and some of the higher-yielding Ground traffic. So I'm excited about the programs that are in place at Ground and also the role it's going to play as we move towards One FedEx. Still a lot of work to do, Network 2.0. It's going to take some more time, but some great work going on there. You know, UPS talks a lot about adding on healthcare SMBs. Does mix matter? Is there a difference of what you're doing behind the scenes in terms of chasing end-market business? Well, we're focused on revenue quality. You know, FedEx has an outstanding service offering. I dare say it's superior in terms of speed and reliability, and that's been one of our strengths, and we're able to garner a strong yield as a result of that. And we're going to go after these markets, and I think we're going to be successful as we go forward. And so mix is always a factor, but our focus is on because of the product and, excuse me, the product and the network that we have, we think we can compete for the highest-yielding freight. So on that, we used to hear a lot about UPS and FedEx kind of talk about what percent of lanes they were faster than the other. Is there a catch-up from your peer on service capability where, you know, we don't hear each of the companies talking about that, or you just mentioned superior service. Is there- Yeah, I'm just- A definable backdrop to that? I'm just going to talk about our network, and if you look across the board, we have speed, we have reliability, and we think we're the best at it, and we're going to continue to prove that to our customers. So you're on ground, sticking on ground. You target margins up year over year and up sequentially. Anything different seasonality-wise or market shifts given the lack of volumes that you'd highlight onto that, your last target there? Nothing material that I can speak of other than the things we've talked about here. All right. Shifting to freight, what a remarkable shift in the segment, right? You know, only a few years ago, I think John Smith took this from what was maybe an add-on product, if we can kind of call it that, to a standalone performer, and Lance has certainly presided over the Yellow bankruptcy shift. So how do you view this segment in light of your market leadership position? Is this going to be kind of as you do the transition on core, it's something that is just taking care of its own? Is it a share giver as you focus more on quality and allow some shift share to fade away? How should we think about how you look at that market? Well, we never want share to fade away. Okay. But from an LTL standpoint, I mean, we really, we really like our freight business, and I think we're just now starting to tap the ability of freight to participate in our One FedEx in terms of how it can help Ground and Express and vice versa, which is one of the exciting pieces. We have the largest and best network, the largest and best fleet, and we look forward to that being a major contributor for us in our results on a consolidated basis as we go forward. Okay. Maybe a year ago, or just maybe nine months ago, I guess, we saw a rush to divvy up the Yellow Freight, and then Yellow's assets into the marketplace. How is the freight market today? You know, we heard Old Dominion talk about having 30% excess capacity, yet I presume we're not talking price competition, or are you starting to see some of that on the edges? Maybe talk about the state of the freight market. Yeah. I think the state of the freight market is solid, and for us, we're focused on, as I talked about, revenue quality, and sometimes from a volume standpoint, that may mean not chasing after the lowest-yielding freight. So there's a balancing act that we engage in every day, in terms of where we deploy our assets, and again, a focus on our cost structure and going after the highest-yielding freight. And I think our team is doing a great job. You know, this actually, in Q3, you know, we were up against a tough comp because of a $30 million sale of assets that we were focused on. So, you know, going forward, we will should have a better comp, and, you know, I think the LTL business is going to continue to be a good contributor. Excess capacity of FedEx, do you talk about those levels? We're constantly looking at our capacity and right-sizing it with the demand environment. And, you know, as I talked about capacity before, and I'm not sure what the new normal is, we also want to be careful that we're able to adjust to the market when it comes back, and even surge, right? So it's a constant balancing act in being able to, you don't want to cut too thin, because then you could leave some, if COVID taught us anything, not that you want to ramp up to COVID-type surges, but, you want to be able to flex the network and have enough capacity. And I think we're in a good place with the capacity we have. Okay. And, were there opportunities—I guess, how are you thinking about service center network now and need to grow that over time? That's all part of our DRIVE initiatives and Network 2.0, so I think that will all be part and parcel of our evolution here. I mean, on the freight side. Oh. On the freight, freight specific. Oh, well, I think as well. I think as well. Okay. Um- Yeah, I will add to there. Go ahead. You know, we took a fresh look at our Freight network last summer, and out of that, made a determination to close 29 facilities. Just in the last couple of weeks, we announced that we're this summer going to close an additional seven. So there will be some additional capacity coming out. Having said that, there will be other doors that we will be adding along the way. So it's not entirely reductions that we are making. We're looking at how we run the network today, what nodes are required, and adjusting accordingly. So how would you, I guess, blend that into margins in terms of your... You know, you're seeing them up sequentially and year over year. I guess we're at, you know, just shy of 20% now, down to 16% last quarter. Is this something where you think that's a good long-term run rate in that upper teens for this business? Is there- I'm not going to commit to a particular run rate. What I can tell you is, we're going to be focused on as large of a margin as we can get. I think the opportunities that we're creating through DRIVE, through Network 2.0, through the companies working together, is going to continue to allow us to expand our margins across the board, including freight. Does freight need to be part of FedEx? As I just said in my remarks, we really like our LTL business. We think it's great. It's a great contributor, and it's a great business, and it's run by some outstanding people that are all about FedEx. Okay. Let's talk a little bit about labor. You know, we went through your peer, you know, a trying time for them. Certainly, you were more market exposed all through that post-COVID period, where you had to kind of mark-to-market labor to the price- Mm-hmm ... in the market through the market. How is it now, after they've had this huge leap to the market? Are you at market rates? Do we see anything in terms of rates? And how do you think about or how should we think about, as you blend the two networks, how do you think about labor in that? Obviously, you've got two different- Mm-hmm ... structures. We can talk about the NLRB and the RLA. What should be the right governing structure? Maybe you can throw that in there as well, but maybe talk about how you think about, first, labor rate, rates, then the labor market, and then moving on to the RLA and NLRB. Sure. And Ken, as you alluded to, we had the ability to make adjustments during that COVID surge period, which in a union environment, you can't do that. It's, you know, the company cannot unilaterally, you know, make increases, 'cause that has to be bargained for. So I believe that's a significant benefit for the company in terms of... Well, I should, and also say, we want to do right by our employees. So we had announced $1 billion of investment in our employees back in September of 2021, where we were able to make adjustments along the way to adapt to the marketplace. And that's one of our strengths. So, when you talk about market rates, we think, FedEx offers a tremendous value proposition for our employees, and it's an attractive place to work. If you look at our mantra, that's been in existence for decades now, it's PSP: People- Service- Profit, and the people come first in that PSP model. So, we continue to tap the market in terms of talent, as well as making sure we're compensating our people appropriately. No more so than now, as we're bringing the opcos together. There's different pay structures within the different operating companies that we're rationalizing and making sure we're being fair with our employees. So again, just to clarify, right? So if they had the, what, 13% catch-up- Mm-hmm. Did that put them over where you're paying, or did that bring them up to your level? I just want to understand the future. Yeah, I think- Do you need to have- I think that's a tough comparison, because you have things like longevity that go into it, and what their jobs are, and, you know, there's a lot of variables. All I can say is, we believe we have a very competitive employment offering with a great company, with a great culture that's strong and excited about the future. Let's revisit the NLRA- Sure ... RLA versus NLRB. I guess, you know, you're going to make significant changes as you blend the networks, and you're going to, in each market, decide who's winning in that. So how should FedEx be governed going forward? What we're building here with FedEx is a integrated air-ground express network, which is exactly what the RLA is intended to govern, and we believe we are appropriately governed by the RLA. There was a reason, the government enacted the Railway Labor Act, and that and that it was to include airlines as well as express companies, and that was to protect against the things that none of us want, and that's labor disruption in such a critical part of our economy. So, we believe the RLA will continue to apply, which been upheld through numerous challenges, and, you know, that's, that's, that's the path we're on, and that's the path we're gonna continue to take. Okay. You pulled back from some Sunday delivery regions. I guess maybe was that a year or two ago? We had a lot of disruption or potential disruption from contractors seemed to fade away. You've alleviated some of that with some of the different regions, and one of the things you did was step back from some areas of the country on Sunday delivery. How did that impact any customers, relationships with operators who were hesitant about the service? Yeah, first of all, I think it's important to note that we offer our weekend Saturday deliveries cover pretty much the entire country, which is a great service for our customers. And it's true, we pulled back roughly 50% on Sundays, and still are market leading in that. I don't believe any of our competition, certainly our primary competitor, doesn't deliver on Sundays. But we took a thoughtful approach to that. Where were the important markets to continue to serve on Sundays? And we'll continue to rationalize that as we go forward. I don't know if you want anything to that. I think that's good. Yeah. How should we think about PT costs and the ability for this to be a lever for savings? When you think about rails, contractors, the employee shift, in this restructuring environment, has that impacted your ability to hire and contractors right now, given the knowledge that you may be shifting the network? Yeah, we're always focused on that. We talked about capacity earlier. It's kind of an art and a science to make sure you're able to take and effectively employ the resources you need, given the current demand environment, take advantage of the surge, be able to adapt quickly in a downturn, and we feel really good about the direction we're going. Are there gonna be changes? Of course, there's gonna be changes in a transition of this magnitude, but a major focus of ours is how we treat our people, how we treat our contractors, and do it in a fair and appropriate manner, and make sure we're delivering the service we need. If somehow things aren't going as we expect, then we'll adjust. Let's switch subjects back to the post office. You mentioned them a couple of times. Mm-hmm. You had the contract for more than 20 years, went from making money to break even at the end. So that's the $400 million downshift you talk about, as they move to minimum volume commitments. UPS talked about using the Ground network to move much of the volume, said this was something that FedEx couldn't do. I think the market's trying to figure out, did they win this on price? Was there maybe because they offered a different mode of using ground versus express? Maybe any thoughts you can provide on the process of what went on with the post office. Well, I'll start by countering a little bit. I don't think there's anything that FedEx can't do. But we approached this negotiation in a way that said it needs to be mutually beneficial for both parties. Yeah. As we saw from the U.S. Postal Service's drawdown of the business, that was not mutually beneficial. There was a need to approach that negotiation that included the post office's interest, but also FedEx's interest. We got to a point where there were a number of areas where that wasn't met, and as a result, we're going to, you know, play out our contractual commitments and then aggressively go after the network changes, not only the changes, but also the opportunities that it creates to be more flexible with our network once that contract is no longer in place, because it's currently burdened by lower volume requirements on us that are not as profitable as they once were. Yeah. Um- Anything you want to add to that? No, that's good. Okay. Thank you. Well, let's take it a step further, right? Yeah. In the aftermath, the FedEx's network, if I recall, had, what? 30 or so or less flights pre-contract. You had 110, I think, give or take, at the peak here. In the daytime network, you're talking? In the daytime network. Yeah. Yeah, yeah, yeah. How do we think about this post-contract? Is there in the restructuring? Well, you know, I think what you can think about is that we're thinking about it every day. Yeah. Seeing what is the best formula for us. We're gonna continue to have a daytime operation, and we have some great customers on that. Will we do as much as we're doing with the U.S. Postal Service? Probably not, but we're gonna continue to rationalize the network, and there's a lot of great work going on in that area. Okay. You targeted about $5.5 billion or $5.4 billion in CapEx, just over 6% this year, going down to less than 6% going forward. Aircraft purchasing, I think, falls from $1.5 billion down to $1 billion in fiscal 2026. What then? What's the CapEx being used for? Upgrades, sort center upgrades. What do you need to still do in order as you move to blend Ground and Express? Obviously, you talked about IT a little bit, but where does the capital go? Yeah. First of all, I'll say I'm very excited of where we are on this particular topic. We achieved our goal of less than 6.5% CapEx to total revenue a year ahead of schedule. We also, this year, is about $5.4 billion- Mm-hmm ... in CapEx, which is notably down $700 million on a year-over-year basis. We have set those targets on the aircraft and related expenses side to get to the $1 billion by fiscal year 2026. So a lot of good things happening there. In terms of where we're investing, look, we've invested in a great air network and we're gonna focus on harvesting as much of that as possible as we go forward. There are other areas. Network 2.0 is gonna take some investment in FY 2025, for sure. So that's a primary focus. Our ground fleet will, you know, lend themselves to upgrading and investment. Some different vehicle types may be optimal as we migrate into Network 2.0. So, we're focused on the rigor of staying within the targets that we've set. We're pleased with the results that we had and the reductions we've done here. On the air side, sure, we're gonna continue to invest in the best technology, but we're gonna stay within the targets that we've laid out. So let's maybe bigger picture, but thoughts on Amazon is kinda always in the backdrop, you know, the $100 billion they've spent over the past 10 years, give or take. You know, they've announced third-party offering. What does that mean in the marketplace? You have to ask them what that means. But what I will say is, look, anytime a competitor comes in, into the market, it gets my attention. We have two very different business models right now and two very different networks, and we're focused on the network that we have and the products that we offer, and includes pickup and delivery, and includes Express, Priority, International, across the board. If you look at Amazon's current offerings, they are almost exclusively delivering from their retail operations. Using Cyber Monday as an example, I don't know that they picked anything up. Could that change? Sure, it could. We'll be watching that closely, but in the meantime, we're competing in with what we do best, and that's providing speed and reliability for our customers, large and small. So, John, as we wrap up, what are your long-term priorities for FedEx, and what does success look like to you at the end of this overall? You've got DRIVE, you've got Tricolor, you've got Network 2.0. What does FedEx look like to you? Well, first of all, thanks for this opportunity. And again, I apologize for my initial tardiness on that, but we are in an exciting time at FedEx. When you look at all the things we talked about, the DRIVE initiatives, with putting aside One FedEx and Network 2.0, this is a serious program that's covered weekly with some of the operating domains, where we measure where we are against the targets that we've set. And sometimes programs will deliver more than we expect, and sometimes they'll deliver less than we expect. And what we do know is that there's always a pipeline of new ideas that are coming to the table that have this structure behind it. It's something new and different for FedEx, and it's exciting, and you're seeing the results in our economic results. So that's very exciting. Then you take Network 2.0 and One FedEx, bringing it all together. I've been involved in a couple of integrations in my prior life, and I, I know what good looks like. And it's exciting to see the levers we can pull by bringing this all together with Network 2.0 and One FedEx because there was such separation. We did that really well for a number of years, for all the right reasons, but now it's the time to bring it all together, which to me is very exciting. And the people are really engaged in it. Our culture is strong. So what I'd like to see down the road is a successful execution on Network 2.0 and One FedEx, a continuation of DRIVE being part of our fabric, along with our PSP model that I talked about, and continue to serve our customers and grow our market share. Tricolor is just a piece of all that. Tricolor, I think, is gonna be really exciting, once it gets traction in terms of leveraging our ability to serve the priority freight market. I know you're not gonna give a number, but- Mm. You gave us a lot of piece parts for 2024. We set the stage with 2025, with the 2.2 and unknown how much of it comes down to the bottom line. So what are the risk and opportunities at this point to that flow through and you know, in terms of the next step, and can we start with double-digit earnings growth target in this environment? Is that something that you know, maybe for the company backdrop, not as a 2025 target, but as a backdrop of what kind of growth FedEx can generate? Well, some of the risks are some of the things we've talked about. You know, the softer market, the continued phasing out of some of the demand surcharges, the U.S. Postal Service, you know, that's gonna be a headwind for a while as we adapt it to changing. But I can say we're well positioned. Inflation is another factor to consider in all this in terms of a headwind. What happens with fuel remains to be seen. But our... Again, our focus is, and I'm not gonna give, I'm not gonna give a number. Look forward to talking to you further in June, but our focus is, hopefully, you can see, at the risk of repeating myself, three quarters in a row, where revenue has been down significantly, and we've delivered year-over-year improvement in operating income and margin, and nobody else is doing that right now. And what that says to me is that the DRIVE is working. As we started out, the success is DRIVE, Network 2.0, and then the third one was? DRIVE, 2.0. I'm not sure I remember what the third one was.