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FedEx 2.0: Two Years In — Transcript

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0:00Welcome to Industry Insights with Route
0:01[music] Consultant, your front row seat
0:03to the fast-moving world of logistics
0:05and beyond. Each week, we bring you
0:08gamechanging insights, real world
0:10strategies, and fresh perspectives
0:12[music] to fuel smarter investments and
0:14build stronger businesses. Join us as we
0:17sit down with expert guests to explore
0:19emerging trends and pressing topics
0:22across a wide range of industries. This
0:25is Industry Insights.
0:30Hey everyone, welcome to Industry
0:32Insights. This is a special episode that
0:34was actually recorded live at the Route
0:36Consultant Expo in 2026. We're releasing
0:38this over time so that if you weren't at
0:40the expo or if you missed the session or
0:42if you're just catching up, these are
0:44all coming out over the course of the
0:46year so that you can go back and watch
0:47this content and make sure that you see
0:49everything that we went over at the
0:50expo. Today, you're going to hear from
0:52Amy about the FedEx transition and what
0:54they've learned two years in
0:56>> this session. Um our last session of the
1:00series is uh 2.0 2 years in. So we um
1:06were in a small contract and we went
1:09live 2.0 uh October
1:1230th 28th of 2023. So we've been in it
1:17um a couple times a couple years. Uh
1:20three peaks
1:22and two years. Two peaks. Three years.
1:24This is our third peak. 23 24 25. Yep.
1:27Um this is Mike. Mike is um my one of my
1:31senior managers. Mike is in charge of um
1:35he's between Dave and I and our BCs,
1:38which are our local managers, right? The
1:40guys that run the terminal. So um he's
1:42one of four guys here that we have that
1:44do that. Um, so they are the layer that
1:48we talk about, um, that runs my business
1:51for me locally, so that or regionally,
1:54all my terminals, so that Dave and I
1:55don't have to go to the terminals,
1:57right? Um, so they're that that layer
1:59that you may not have at this moment,
2:01but as you get bigger and scale, you may
2:03need. Um, Mike is also our Doge manager.
2:07So he's our director of ground
2:09efficiency. Um, and he does kind of just
2:12what that sounds like. He kind of goes
2:14around and pokes at all of our processes
2:17and makes sure um that there's
2:18efficiencies um and that our policies
2:21and procedures are being followed to the
2:23tea. So he's the perfect person for our
2:26express integration. Uh very detail
2:29oriented. He's been with us for 12
2:32years. Started out as a driver um and
2:35then went on contingency. actually got
2:37his CDL, was going to go that route, and
2:40then we needed him to come back and and
2:42we needed the the this the force and the
2:44power on the P&D side, so he stayed with
2:46us on that side. Um, so we're going to
2:49talk about a little bit about 2.0 in
2:51general and then our journey and kind of
2:54what that looks like. Um, I know the the
2:57buzz. Um, there's positives and
3:00negatives. uh people you'll hear
3:02obviously um from my last few sessions
3:05lean in right we're gonna talk about
3:07that and and how this this is a good
3:09thing for us.
3:11Um let's see why is this there we go. Um
3:15so 2.0 um and Mike's going to jump in
3:18here and there but he's also going to
3:19help with some uh Q&A.
3:23Um the 2.0 overview I think the big rub
3:27and somebody just asked me this Tuesday.
3:30They they said, "Well, we're gonna go
3:322.0, and I just don't know how FedEx is
3:35going to expect my guy that does 200
3:37stops to make 10:30s and noons." And I
3:41said, "Well, they're not." And he said,
3:43"Well, how is my guy going to do 200
3:45stops?" I said, "Well, he's not like,
3:47it's going to be different, right? He's
3:49not going to do 200 stops anymore
3:51because he has 10:30s and noons." So,
3:54right, throwing out the old playbook and
3:56kind of recreating what a new route
3:57looks like. Um, so kind of take that
4:00initial stress of thinking that you're
4:03going to layer 2.0 on top of your
4:06current workload as it exists for your
4:08individual drivers is just not the case.
4:10It's just unrealistic. Um, and FedEx
4:12knows that, which is great. Um, so we're
4:15going to talk about the differences. the
4:16mindset which I just kind of talked
4:18about um transition and learning
4:22uh expectations the f word um which is
4:26not the word that I say all the time but
4:27it is flexibility [laughter]
4:30uh be flexible um and try not to use the
4:33f-word with FedEx um and then changes to
4:36the network um which include
4:38redistricting which I know is a term
4:40that people are getting kind of scared
4:42about um CSA review or takeover kind of
4:46like the flip that some of the the
4:47contracts had in Canada. So,
4:49redistricting, I've gotten a lot of
4:51questions about this. What happens when
4:53you carve out a piece of my area or
4:55FedEx is talking about moving this zip
4:58code and and giving me more of this area
5:00and I don't know what that looks like.
5:02Um, so that's what redistricting looks
5:04like. Um, and then CSA review.
5:08um if you are not servicing your
5:10customer today,
5:12you probably aren't in a good standpoint
5:14to to take on 2.0, right? So, you kind
5:17of need to get your your ship in order,
5:19if you will, because it's going to get
5:22um it there's going to be higher
5:24expectations in a 2.0 terminal.
5:28Um Slicker's 2.0 experience from 102823.
5:33Um if you know what happens in late
5:35October uh again we talked about our
5:38line hall launch in November of 20 uh
5:40November 22nd uh years ago and of course
5:44we take over 2.0 just 15 days before
5:48peak. So that was a learning uh curve
5:51for for all of us. Um we had to add net
5:56plus resources right that was we
5:58obviously knew we had to add more
6:00drivers and more trucks. Um the FedEx
6:03expectations, Mike, can you talk about a
6:05little bit of those? Just the
6:06expectations from FedEx in a 2.0
6:09terminal.
6:10>> That's different. Yep. Than in a regular
6:13standard terminal.
6:14>> So in the 2.0 stations, they they're
6:17very strict on the uniforms and the
6:19badge. They want your badge shown at all
6:21time uh because it has a TSA sticker
6:24that shows that you're compliant with
6:25TSA. So, the security ramps up. Um,
6:29which you know, the security should be
6:31good regardless, but they really ramp up
6:33the security. Check your bags, make sure
6:35that TSA compliance, and if you're not,
6:36if you get a new hire, you have to
6:38escort them around the terminal until
6:40they get compliant with TSA. Um, and
6:42they can't pick up any boxes or anything
6:44like that until they're TSA compliant.
6:47>> Yep.
6:47>> And uniforms, like very strict. Um, and
6:51they will come around. There's TSA um
6:54and FedEx security that do spot checks
6:57um throughout the terminal and they also
7:00go on route sometimes.
7:01>> Yeah. Going back to the the next thing
7:03there, the security, they can go out on
7:05route and you know make sure your
7:06truck's secure. They're going to
7:07basically see if they can get into the
7:09vehicle if you're not present at the
7:11vehicle.
7:12>> Yep. So, there's all kinds of security
7:13checks. Um and it does take a little bit
7:16longer to make a delivery, right? If you
7:17have to lock the truck and you're not
7:19used to locking the truck, um you
7:21should, but you know, we're we're a
7:22little bit more loosey- goosey on the
7:24standard P&D side, but these are things
7:25that you're going to be held accountable
7:27to on the 2.0 side. Um routing and
7:31efficiency. Um so, we can throw
7:33efficiency right out the window, right?
7:35Because there's nothing efficient about
7:37passing a stop to go to another stop and
7:39then having to double back to go get it.
7:41Um can you talk to us a little bit about
7:44Mike some of the frustrations in passing
7:48a stop or not being efficient? So um
7:51like a hospital delivery and those kind
7:53of double back moments.
7:55>> So um a lot of the the time commitments
7:58is depending on the dispatch time and if
8:01there's bad weather for the that there's
8:04there's bad weather can delay the
8:06dispatch which makes it harder to make
8:08your commitments. So there's times where
8:09you have 10:30 due and you might
8:11dispatch at 9:45 and you have basically
8:14a 15 to 30 minute window to hit your
8:16commitments. So for us example we like
8:18to use as a hospital which will get you
8:20know 50 to 100 packages. They might have
8:22three boxes that are 10:30 commitments.
8:24We need that driver to hit those three
8:26boxes and then go to their next
8:28commitment and then come back later and
8:30hit the ground the the ground volume.
8:33That way you know we get the commitments
8:35off in the time. So, counterintuitive to
8:38efficiency, right? You're at the
8:40hospital, you should deliver the boxes,
8:43um the the express boxes and the ground
8:46boxes and and possibly even do a pickup.
8:48It would make sense if we could do all
8:49of that at one time. But if there's 40
8:52or 50 ground boxes, um and then you need
8:55to get those off, just that 5, 10, 20
8:59minutes that it would take to deliver
9:01those can ruin your next express
9:04delivery, right? So you need every
9:06moment. So you drop those three boxes
9:08and you book and you go to another 10:30
9:10and then you book it back to the
9:12hospital and then you you book it back
9:15to the hospital for the pickup. So it
9:17sounds super messy but again this is the
9:19new norm. I know it seems super
9:22counterintuitive to what we talk about
9:24with DRO and with groundcloud and with
9:27routing efficiency and things like that.
9:30Um and again this is why uh the
9:33efficiency number and we talk about that
9:35love language right the stops per
9:37resource are much lower in a 2.0
9:41terminal than they are in a regular
9:43terminal because they know you your
9:45efficiency is going to be inefficient
9:47and your drivers are going to go nuts
9:49about it because it doesn't make sense
9:51to have to go back and double back but
9:53it's their workload and it's going to be
9:54a manageable workload. um the BC role
9:58changes. So um you know you have your
10:02typical BC especially if you're in a
10:04terminal that's not going 2.0 or that
10:07was not 2.0 first and then converted to
10:102.0. Tell us about um so our manager's
10:13name is Taylor. She's great. Uh tell us
10:15about what changed for Taylor in
10:17protecting service the time commits the
10:20drivers and even uh sweeps and and
10:23dropboxes. if you could tell us kind of
10:25what the dropboxes are and and give them
10:27some insight.
10:28>> So the her role changed um you know not
10:32every day is a late dispatch. It's the
10:34days that are the late dispatches that
10:36get a little bit tougher and if you know
10:38there's a late dispatch coming because
10:39they usually give us a fair warning that
10:41you know we're going to have a late
10:42trailer. You may have to shift some of
10:44the 1030s to other people maybe like
10:46passer throughs people who are going to
10:47the country routes. Maybe we'll give
10:49them them one or two 1030s. That way
10:51it'll help the next driver coming
10:53through. So something that she does in
10:55the mornings and and the supervisor
10:56that's there is just making sure that
10:59someone doesn't have too many
11:00commitments and they're going to
11:01complete them because we all know that
11:02DRO is not completely accurate. So
11:05sometimes it may show that driver man of
11:06six 10:30s and they might end up with 9
11:09to 10 and we've depending on the driver
11:12and what they have we've noticed that
11:14you know it takes about it takes about a
11:17half an hour for 5 10:30s. So that's
11:20where we really pay attention in the
11:22morning, making sure that and then you
11:23know when we get past the the 10:30
11:25point, we're making sure that the
11:26drivers are going to hit their noons. So
11:28a lot of times drivers will just hit
11:30their 10:30s and go to their noons and
11:31then start their day. And then going
11:33back to, you know, just the efficiency,
11:35you're just passing up stops at that
11:36point, which is a big change for the
11:38drivers. Uh obviously now we're three
11:40years in. Uh it's the norm, but it took
11:43a long time for some of the drivers
11:44really to get used to just, hey, there's
11:46a stop, there's a stop, and just go buy
11:47it. Just go buy it. instead of just
11:49trying to be efficient as possible.
11:52>> So, a lot of problem solving.
11:54>> And then um so the next one we actually
11:56talk about being flexible with call-ins
11:59and dropboxes. So, talk about what a
12:01call-in is and then hit what the dropbox
12:03looks like.
12:04>> So, there's a there's a lot of call-in
12:05pickups throughout the day and it'll
12:07just pop up. Um we've noticed that it
12:08happens to be a lot of the same ones.
12:10It's usually a doctor's office, uh the
12:12hospital, a pharmacy, you know, the
12:14Walgreens pharmacy, grocery store
12:17pharmacy. it typically is everything. So
12:19drivers are kind of used to it that like
12:20this is going to eventually pop up. Um
12:22and then our team that's in the the city
12:25where there's a lot of call-in pickups,
12:26they work really well together. So they
12:27say like, "Hey, I'm on the other side of
12:28town. Could you grab this?" Um and then
12:31the dropboxes was a difference because,
12:33you know, we had a lot of just, you
12:34know, normal 3 to five pickups, maybe a
12:37four. Well, we jump to those 5:00
12:38pickups. Um so we try to manage drivers
12:43not having to be out till 5 every day.
12:45and maybe if there's three city guys,
12:46one person rotates throughout the five
12:48o'clock pickups throughout the day. And
12:50then with the the sweeping that Amy
12:52mentioned, uh express is due back at our
12:55terminal by 6 p.m. So if you have a guy
12:57who has a later day out and he has
12:59express in his truck, that express is
13:00expected to be back by 6. So if someone
13:03else is going to be done sooner, we need
13:05them to grab that express off that
13:06driver's truck and take that back to the
13:08terminal. And that's a big hurdle that
13:10we have during peak. It's an everyday
13:12occurrence where we have someone
13:13sweeping trucks to get the express
13:15volume back because we can't just send
13:16one truck to do all express volume
13:18because then at that point they're doing
13:19no no deliveries. They would just be
13:21doing pickups.
13:23>> So, a lot of problem solving, a lot of
13:25communication. Uh but the role has
13:27definitely changed. It is um almost
13:30impossible for our manager to be in a
13:33truck in that terminal, right? Because
13:34there's a lot of pieces. So for her to
13:36be in a truck and doing a full route for
13:38a call off um is almost detrimental
13:41because she's got her own route to do,
13:42right? And then she's also kind of
13:44managing and dispatching. Um so the next
13:48one we talk about is managing your
13:49business. Remember that there are
13:51expectations that FedEx sets, but it is
13:54your business to run. Okay? So when we
13:56first started, FedEx told us its peak
13:59you're going to be better off if you
14:00just run over overlapped, right? which
14:02we all know that what that was from and
14:04uh home delivery ground which is where
14:06you just run business as usual with
14:08ground and then you layer express on top
14:11of it. Um we did that for like 3 days
14:15and Mike was like nope that doesn't work
14:17for us. This makes no sense. We're not
14:19hitting time commits. Everybody's
14:21everywhere. We're passing trucks. It was
14:23just getting super messy. So we decided
14:25immediately to integrate. So every
14:27single one of our trucks is overlapped.
14:30ground and 2.0. Um, and what we did is
14:33we just kind of condensed the routes,
14:36right? So, if they were at 120 stops a
14:38day, now they might be at 100 stops a
14:40day. And then that slice of the the
14:44network does the, you know, they would
14:45do their pickups in that or their time
14:47commits in that um, smaller route. So
14:50then we just kind of carve things in um,
14:53which ended up having some growth
14:55opportunity. Um, we've had a couple
14:58different types of growth in the 2.0
15:01terminal. Uh, the first type was volume,
15:04right? And as I mentioned earlier, 2.0
15:06growth is great because those are small
15:08boxes. Like don't fight it, right? We're
15:11getting enough of the big boxes. Uh, so
15:14welcome the small ones even if it comes
15:15with a time commit commit attached to
15:18it. Um, so we did grow in volume which
15:20was the volume that we needed. Uh, we
15:22were at about 900 stops a day. It was a
15:25smaller contract that we took. Um, and
15:28Mike had been saying for years, I just
15:30need like 200 more stops. 200 more stops
15:32and I can add a supervisor and we can
15:34kind of we'd be a lot more efficient. We
15:36could put these routes in. It would be
15:38just two 200 more stops and we would
15:40just be perfect. Um, and the express
15:43volume gave us that growth. So we were
15:45able to achieve those numbers kind of
15:48the perfect fit for what he needed the
15:50extra 200 stops to bolster the staff um
15:53and really service the customer and give
15:55everybody a manageable day. Um and then
15:58we had additional growth opportunity by
16:00growing they gave us new routes. So
16:03there was a local terminal nearby that
16:05was not 2.0 but customers that wanted to
16:08be serviced 2.0. So they actually
16:11redistricted redistricted
16:14um a couple of the routes out of this
16:16one terminal and pushed them over into
16:19our 2.0 terminal. So they just said
16:21these guys are requiring 2.0 service.
16:24They're now in your terminal. They butt
16:25up against your area. They're yours.
16:28Just gave us the area. So then we grew
16:30by two. Um and then that grew into five
16:35>> extra routes
16:36>> with Yeah. Extra routes. So then we got
16:38um another chunk uh which was a new was
16:41which was different. So when we started
16:432.0 we didn't have a lot of industrial
16:46area in the current contract that we
16:48had. So it was kind of a little bit more
16:50not I wouldn't say smooth sailing or
16:52easy breezy but it wasn't as difficult
16:55um as we had expected with this new area
16:58that we took on. And if you want to talk
17:00about um how Mador how this new area was
17:03different than maybe what you had seen
17:06that we for the two years that we had it
17:08prior.
17:09>> So basically just you know the the your
17:12bulk of 1030s are in the industrial
17:14areas or business areas because no
17:16residentials are getting 1030s. It has
17:18to be a business. Residentials are
17:19usually gnomes. Um, so just the knowing
17:24that the business routes have to be a
17:26little bit smaller to make these
17:27commitments and for the call-in pickups
17:29and those stuff, etc. to that point. Um,
17:33and then in our terminal, they I don't
17:35know if someone in the background made
17:37some we have some 11 commitments. So
17:39they have 11s and 12:30s somehow, which
17:42happen to be the ones close to the
17:43terminal. And the farther away ones
17:45happen to be the 10:30s and noons. We're
17:46not really sure how that happened, but
17:48when they told us we had a half an hour
17:49grace on our 10:30s, we didn't complain
17:51because that gives us some more time.
17:53That actually gives the driver the
17:55capability to have more early
17:57commitments because now she can hit, you
18:00know, 8 to 10 before 11:00 p.m. or 11:00
18:03a.m., sorry.
18:04>> So, one of the other things is if you're
18:05in a rural contract and you're like it,
18:08okay, like delayed, right? Delayed
18:10dispatch because the plane has to come
18:12in. And then if you're in a snowbl area,
18:14you're like, "Okay, that's gonna add a
18:16half hour and messiness." And then I
18:18have these rural contracts like we're
18:19never getting there at 10:30. Know that
18:22FedEx gets that in some of our rural
18:24areas. And we're hearing, you know, in
18:26when we do these sessions and we talk to
18:28contractors that are in rural areas,
18:29they don't have 10:30s. They only have
18:32no. So they get that you can't get there
18:35right in negative 15 minutes. [laughter]
18:37We're not going back in time to service
18:39the customer. So, understand that when
18:42we talk about these things, they
18:44understand what we're going up against
18:46and they get that there's STEM. Um, when
18:48we first took over, um, and they were
18:51trying to figure out, even the terminal
18:52was trying to figure out things or we'd
18:55have fog from Pittsburgh, that's where
18:57our trailers come from. Um, if the
18:59weather was delayed, they would give us
19:00like 15, 20, 30 minute exemptions. We
19:03actually had construction. They were
19:05building a gas station at the end of our
19:07terminal. They gave us an extra 15
19:09minutes exemption for those deliveries.
19:12So, it's not as bad like it's not just a
19:15hard like do it by 10:30 and there's no
19:18workaround. Um, we actually even have
19:20our drivers call us sometimes and say,
19:22"Hey, like there's an accident. We're
19:23not going to get to this by 10:30 and
19:25they will give us a call-in exemption."
19:27Like the terminal wants you to be
19:29successful, but you have to communicate.
19:31>> There's there's a lot of days, too. If
19:33you live in a bad weather area like this
19:35snowed that day, you'll have a full
19:37weather exemption for the day. They ask
19:38you to be respectful of time commitments
19:40and still try to make them a priority,
19:42but you'll you're not held to the
19:43standard of it has to be delivered by
19:4410:30 by noon. If you get there at
19:4612:15, 12:30, um it's it's not going to
19:48count against you. So, the the full
19:50weather exemption days really really
19:52make a big difference. And just to add
19:54to that, during peak, your 10:30s
19:56actually go to noons and your noons go
19:58to 1:30. So which makes a world of
20:00difference uh because now they have all
20:02morning to hit those early commitments
20:03and then half and you know to early
20:05afternoon to get to rest commitments. So
20:07that's a big perk during peak that you
20:09get those that extra time to hit those
20:11commitments.
20:13>> So again FedEx is with the you know has
20:15a little bit of understanding as they're
20:17pushing out these tighter um
20:19expectations of us.
20:22>> Um so the dirt on the differences uh the
20:24big idea you'll hear me say this all the
20:26time. It's not harder, it's just
20:28different. Um, change is hard. Yeah,
20:31take a picture if you guys want to take
20:32a a snapshot of this. Um, so just to hit
20:35these out of the gate, um, dispatch
20:38times and weather challenges just it is
20:41tough if you are in a snow belt or your
20:43plane is coming from somewhere that has
20:46weather, right? Um, we our plane comes
20:49from Pittsburgh, so we get terrible
20:51weather into terrible weather. Uh, so
20:53some of our I mean we've had some 11
20:54o'clock days. Not very often, but you
20:57know, you got to sit tight when your
20:59guys get there at 7:00 a.m. waiting for
21:01stuff. Um, we have tried to get most of
21:03our guys to show up at 8 earliest. Uh,
21:06we do have some, uh, what do you call
21:09them? Old old-timers, uh, legacy drivers
21:11that just refuse to get there late. Uh,
21:14they're early birds, so they have a long
21:15day. Um, inefficiency is a thing. We
21:18just talked about that. Embrace it. Uh,
21:21service is under a microscope.
21:23uh the the 2.0 network is driving the
21:27new norm of customer service. Uh so
21:31service uh has to be there, right? The
21:33these time commits, they're no different
21:35than pickups. Uh they're like pickups uh
21:39you know intensified.
21:40Uh uniforms are mandatory
21:43top to bottom badges on your body above
21:47waist. Um so these are all very um and
21:50they're drilled down. Uh they actually
21:53grab you in the terminal and they're
21:54like, "Where's your badge?" Uh they
21:56expect you to be part of that policing
21:58as well. If you see someone in the
22:00terminal, it's kind of a see something,
22:01say something. Uh trucks need shelves.
22:04You want to talk about that a little
22:05bit?
22:06>> So during the co time, we we invested in
22:09a lot of Nissan. Uh they were great at
22:11the time. They were reliable, but you
22:13have to self-load them. Once we started
22:15getting into the 2.0, No, we can't sort
22:18the boxes and get the truck loaded
22:20efficiency bec efficient so we can get
22:23out at dispatch. So, one change that we
22:25made right away was actually we had a
22:28bunch of cart loaded routes and Amy kind
22:30of gave them the lowdown that uh we need
22:33loadable spots and this has to happen
22:35before we can do this 2.0 for you. And
22:38they invested in more trucks with shells
22:40so they could be loaded. So, as soon as
22:41that dispatch happens, those guys can
22:43roll. uh there was not time to load
22:45those trucks up in the Nissan or a
22:46ProMaster or a Transit, anything like
22:48that.
22:49>> So, it's it's also a challenge during
22:51peak when we have you you have rentals
22:53and you just get a transit or something
22:55like that. We try to keep the
22:56commitments off of that supplemental
22:58route that may be there. That way, we
23:00don't have to worry about them hitting a
23:0110:30 because we know they're going to
23:03be out a little bit after dispatch once
23:04we're loading their vehicle up. Yeah.
23:07>> Uh if you're in a terminal that does
23:09cart loading or does pallet loading or
23:11doesn't have rollers, there's belt lines
23:13that don't have rollers, that will be an
23:15expectation that you have to hold them
23:17to. Um it's not just you that has to be
23:19prepared, but the terminal actually has
23:21to set themselves up for success as
23:22well. So that was the reason also that
23:25we were in in pallets and cart loading
23:28um in that area. And we had to make
23:30sure, hey, I bought these trucks, you
23:32guys need to invest in the technology.
23:34So they had to go get movable belts um
23:37so that they could uh have the package
23:39handlers uh load the trucks uh trucks
23:42need shelves. Um, okay. So, LP
23:44percentage uh will go down and but the
23:47boxes are still there or more. Um, so
23:50this is kind of that funny fuzzy
23:52percentage, right? So if large packages
23:56are a percentage of your total and
23:58you're getting more large packages, but
24:00you're getting also more small packages,
24:03the percentage is not going to be true
24:06to how many big boxes you are getting
24:08because that percentage is going to get
24:10watered down with the growth of the
24:12small volume as well. Right? So it's
24:15going to proportionately increase or
24:17proportionately stay stay the same. Um,
24:21so you have to keep an eye if you need
24:23three bulk trucks, but the percentage
24:26hasn't changed, your percentage of LP
24:28hasn't changed, that's the number that
24:30FedEx is looking at. You have to paint
24:32the picture that even though the
24:35percentage is still 10% or 11% or 13%
24:40that I need I have more big boxes. So
24:42you can do that in DRO um or fro uh by
24:46proving cube, right? you can pull those
24:48reports um or you can just you know make
24:51a report and and and write a unique
24:53characteristic that says I need three
24:54bulk trucks to run this every day um in
24:57order to meet service. So, just keep an
24:58eye on that that percentages are funny.
25:00When both numbers move, the percentage
25:03doesn't change, right? Um, we talked
25:06about call-ins. Returns, uh, Mike did
25:09talk about those. The Dropboxes, uh,
25:11were a funny thing, right? The scanner
25:13opens them. It
25:14>> It was a challenge to open the
25:16Dropboxes. You get a call consistently
25:18on how to get this Dropbox to open. Um,
25:21and just became an issue at first, but
25:23now everyone knows how to do it. Uh
25:25there's occasional hiccups where the
25:27Dropbox won't open and if you just get a
25:29hold of the the CPC, they'll give you a
25:32code to unlock the the box manually. But
25:35other than that, like once we got the
25:36hang of it, it's it's it's easy.
25:38>> Yep. So, um that's kind of like the the
25:42short straw, right, in our company, uh
25:45who sweeps the dropboxes because they're
25:48545.
25:49>> They're five. Some are five and some are
25:51445 depending on the location from the
25:54terminal. So 4:45, 5:00, that's like a
25:565:00 pickup, right? Um, so nobody likes
25:59those. Uh, and you have to pick it up at
26:01that time because the customer has until
26:04that time to get the boxes or their
26:06packages in the box. So um, our guys
26:09were like literally wheeling and dealing
26:1220 bucks and a Gatorade, you know, and
26:14and you can sweep it for me so I can get
26:15off work and go to my I don't care how
26:17they did it. Uh, Mike was like, "Are you
26:19good with this?" And I'm like, "Until
26:20it's broken." like I'm good with it
26:22until I'm not good with it. So if it's
26:24Kumbaya and everybody's servicing and
26:27they can trade and you know work
26:29together, but if we start missing things
26:32and you know it's it's my turn, you paid
26:34me a pack of smokes and a Gatorade to do
26:37it and then something happens or my
26:39truck breaks down, then we got to start
26:42then we're going to have to assign them,
26:43right? Um and our team does a really
26:45good job of sweeping those uh and and
26:47trading off. They're really respectful
26:48of each other. Uh security is no joke.
26:51We talked about that trucks, locks, and
26:53deliveries. Um,
26:55yeah, we've gotten uh we've had a a box
26:59fly off a truck once and it was it was a
27:02big it was a big we don't have to go
27:04into detail, but uh we you know all the
27:06things that happened in the P&D side. Um
27:09imagine if that's a a what was it? A it
27:12was a bow uh like a rifle, right? It was
27:16a rifle. Um, so a box fell off a shelf.
27:20You can't even make this up. Fell off a
27:22shelf, dislodged the side door, opened
27:25the door, the box fell out on the side
27:27of the road. She turned the corner, the
27:29door shut. She had no idea. The box on
27:31the side of a road was a gun, right?
27:34Like, you can't make this up. And it was
27:37a a time commitment. [laughter]
27:39>> Yeah. But thankfully, um, a passer buyer
27:42actually picked it up and delivered it
27:43to the shop himself. But it was like,
27:46"You can't make this up." Like, and
27:47we're like watching the video. I'm like,
27:49"She didn't." They're like, "She just
27:50threw it out the door." I'm like, "She
27:51wouldn't have done that." And to find
27:53out that this was kind of the chain of
27:55events. Mike's like, "Watch the box like
27:57falls and moves." And I'm like, "Get the
27:58heck out."
27:59>> If it wasn't for the camera, we would
28:00have never believed her cuz it was it
28:01was just in perfect unison. The door
28:03opened up, box out,
28:05>> turns, door closes.
28:07>> It was incredible. Um, so but security,
28:10no joke. Uh, but that was a big thing.
28:12It was a really big thing. um that you
28:15know we had to go under investigation
28:16and all these things to to protect her.
28:19Uh personnel, this is a big one.
28:22Mediocre staffers will not cut it. If
28:25you have half-assers, they will not make
28:28it in express. You need people that
28:31care. Um you also have to make sure that
28:34you are setting them up for success. So,
28:36right, so if they're doing 120 stops
28:39today and you load them down with their
28:401030s and their 12elves now, um, they're
28:44not going to be happy. So, you have to
28:45set them up for success, but mediocrity
28:47is not going to work. They have to care.
28:50They have to know um that they're
28:53they're passing, right? That they're
28:54being inefficient and, you know, they're
28:56driving by and they're like, "This makes
28:57no sense why I'm driving by. I could
28:59just stop and deliver it." Like, that's
29:00going to happen. But it's now the new
29:02norm for us, right? they know that
29:04there's a reason why they have to get to
29:05these packages um and get back. So, it
29:08is a huge mindset. Uh one of the
29:10questions that people ask is, well, what
29:12kind of increase do you give your
29:14drivers off the rip? Um to kind of, you
29:16know, brace them for the new workload.
29:19Uh and as I mentioned, it's not harder,
29:21it's just different. The big switch for
29:24us, um so going back, we were early to
29:272.0 and I had no idea what this was
29:30going to pay. I had no idea what it was
29:32going to look like. We didn't even have
29:33a contract. They gave us like an SSSC,
29:36which was like an additional contract to
29:38help buffer the extra expenses. It was
29:40so messy and we didn't have the data.
29:43So, I was just like, I don't know. I
29:45can't I can't give you a raise because I
29:47don't even know what the workload's
29:48going to be like, right? I don't know if
29:49it's going to be less, more even. I have
29:51no idea. So, um the big hurdle for us is
29:55that our people were super efficient and
29:56they were able to get done between like
29:593 and 3:30 every day. So you can imagine
30:02with this new right type of workload
30:06that they weren't getting done at 3
30:083:30. So the mindset had to shift and
30:11that had to come from me and Dave and we
30:13had to say you know I don't know what
30:16this is going to look like but I promise
30:18you if you are doing more work than
30:20you're doing today not more hours if
30:24you're doing more work than you're doing
30:26today you will be compensated fairly.
30:28You have my word. I just don't know what
30:30that looks like today. So, you got to
30:31trust me. I don't know. I mean, who
30:33knows? Maybe you get less work, right?
30:35But it's express work. I don't know. Um,
30:37but the shift was we expect you to work
30:40until 5, so you're welcome for the 3:00
30:44days, the last two years. Uh, but that
30:46was the huge shift is that I'm just I'm
30:48I'm going to expect you to be at work.
30:50>> Hey guys, we just wanted to pause for a
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31:19person soon. Now, let's get back to the
31:20episode. So that was once we got past
31:22that hurdle, uh everything else was
31:24good. But I did not do an increase out
31:26of the gate. I had an honest
31:28conversation with 11 people and I said,
31:31"I promise you I will make it right."
31:33And it came down to trust, which they
31:34have, you know, I had with them. And we
31:37didn't move. I think we only moved one
31:39person, Casey. Um that is he actually is
31:43doing 180 steps and doing his commits
31:45also because he's just an animal. So he
31:47got an increase. Everybody else stayed
31:48the same. They got their annual
31:49increases at at review time, but no one
31:52else got more to do this workload
31:55because we balanced it and it was fair
31:57and manageable. So the guy that was
32:00doing 120 is now doing 100 with time
32:02commits. Seems pretty fair, right? The
32:05workload lessened, got a little bit
32:07tricky, a little bit diff different, but
32:09not harder. Um but he does have to work
32:11into and then again when they do that
32:13swap at the end of the day with who's
32:15doing the um the dropbox, right? Uh
32:19somebody sometimes they get an easy day,
32:21right? And they work together. I got
32:23dinner with my kid. I got this. I got
32:24this. Can you sweep the the Dropbox for
32:26me? So it just worked out well. Um but
32:29just to give you an idea, we didn't hit
32:31it and just essentially bribe our
32:33employees to hang out and go through it
32:35with us, right? We had meaningful
32:36conversations about going through change
32:38and what this looks like.
32:41Uh contradictions. Uh this is my what
32:45the heck slide. Uh that you know between
32:48what we're hearing and what we're
32:49seeing. Um small versus large packages.
32:53Uh right they said 2.0 is going to
32:56integrate and give us a ton of small
32:57packages but we still have large
32:59packages and that's that percentage. So
33:01make sure you're paying attention when
33:03you go 2.0 know that you put in a bulk
33:06truck, right? That's what we've had to
33:07do. We have a full bulk truck.
33:09Everything's actually um routed to the
33:12truck. So, we build an LP route, uh
33:14large package route to keep those off of
33:17the time commits. It keeps, you know,
33:19their day a little bit smoother. They
33:21can focus on time commits. They're not
33:23fighting the boxes. Very smooth. Uh van
33:26line versus cart load. um everything,
33:29you know, you're going to get much much
33:30cleaner on, as Mike said, on the um the
33:35pickups and the time commits if you're
33:37van loaded.
33:39Solo dispatch versus second wave. They
33:42actually gave us that option. Um so what
33:46some of the contractors do is because of
33:48the late dispatches, they'll send some
33:51of their trucks. They're like, I just
33:53can't keep you here, right? You have 140
33:55stops. I got to get you the hell out of
33:56the building. So they send them and then
33:58the manager will actually stick around
34:01and either shuttle those time commits
34:02out to them or they'll handle them
34:04themselves at least the 10:30s um or the
34:08delayed the exemptions. Uh but that's
34:10something that you have to kind of
34:11decide on that like is there days that
34:13you're just going to say this guy has to
34:15get out of here like I cannot wait for
34:17the time commits he's got to go. Um what
34:20do those days look like for us? So, we
34:23we we've tried a couple different ways
34:25of doing this and we actually just did
34:26it on Christmas Eve. Um, the plan didn't
34:29work great. Um, so we got word that it
34:32was going to be a real late dispatch on
34:33Christmas Eve. We kind of felt bad for
34:34the drivers. Uh, there was me, myself,
34:36and a supervisor available to deliver,
34:38so we decided to cut all the guys. We
34:40ended up running into 170 stops of time
34:43commitments over our entire CSA between
34:46two drivers. Um, we had a full exemption
34:49because of weather. So, we end up
34:51splitting it into between two of us and
34:53then ask drivers to come to us once they
34:55finish their route since they got to get
34:57cut out early. Um, we've also heard of
34:59people doing buddy systems where one
35:02neighboring driver may leave, they'll
35:04stay and grab all the commitments for
35:05these two work areas and they'll bring
35:06their commitments out. And they've also
35:08did it before where
35:11one manager might wait for the the big
35:14heavy commitments routes where it's a
35:17full exemption, but you just bring their
35:18commitments out to them. So have a you
35:21know section 432, 430, 428, whatever it
35:24is, have those all separated and just
35:26drop those off to the drivers. Um, but
35:30the the second wave, a lot of people
35:31tried the second wave, which Amy had
35:33mentioned before, of sending ground out
35:35and doing express, you just can't make
35:37the commitments. If you try to have one
35:40person do commitments over three or four
35:42work areas, they just won't make the
35:44time commitments, especially if there's
35:45multiple 10:30s. So, at that point,
35:47you're just not servicing the customer.
35:48So, it's important that every truck's
35:50integrated.
35:51>> So, those were kind of the the hard
35:53lessons that that we learned. um you
35:56know so I think that that kind of covers
35:58the the oopsies but that's where it
36:01points to that BC role is super critical
36:05that they're not in a route already
36:06because one little thing can change in
36:09the morning and they are in kind of
36:11recovery and rescue mode right um do you
36:14have anything to add before I
36:15>> just if you know there's times where a
36:18driver may come in late or they say
36:19they're running behind we may grab like
36:21the 10:30s off the truck or the noons
36:23and then the manager may just go run
36:24those and wait for the driver to come
36:26in. Just that way we know again we're
36:27not missing those commitments. But those
36:29are things that we're just always aware
36:30of that the drivers are there on time
36:32and and what does that commitment side
36:34look like and if you know maybe if
36:35there's only one there we might pull it
36:37off and just again to a neighboring
36:38driver. So we're always paying attention
36:41to the morning what those commitments
36:42look like and that the terminal actually
36:44gives us sheets which shows us which
36:46work area has what commitments for the
36:48day and we pay close attention to that.
36:51>> So we kind of hit the rest of them. um
36:53efficiency versus time commits, uh you
36:56know, bouncing around a little bit, uh
36:58expressly versus integrated, and then
37:01pickups versus returns. If you have a
37:03pickupheavy route, you're going to need
37:06somebody to sweep those those returns if
37:08they're not going to get back in a in an
37:09orderly time. Um we also have the
37:12express boxes separated.
37:14>> Yes.
37:14>> Right. So when you um have pickups and
37:18have express pickups, FedEx expects you
37:21to keep those separate on the truck. So
37:23just even like express goes in a corner
37:25because those are going to get offloaded
37:28by the package handlers first because
37:30they need to go on a plane and get the
37:32heck out of the building, right? And
37:33then they'll come back around. Also
37:35inefficient for them, right? Going back
37:37to your truck for a second time and then
37:39they'll unload the ground the ground
37:41packages. Um so just a little you know
37:45differences there. Um breaking it down
37:48uh two years two years later look back
37:50into our operation. Um so this is kind
37:54of what our growth looked like. Uh we
37:57were overlapped. We have a bulk route.
37:59We do sweeps and we have drop boxes. Um
38:02you can see in 2022 23 we're kind of
38:06flat and then we got express we got that
38:09little bit of a bump. uh 2024 we got a
38:11work area, 2025 we got another work area
38:14and then at the end of this year we got
38:16even more area uh with those uh five
38:19routes that Mike talked about. So it is
38:23good right the growth was there it
38:25wasn't immediate um one of the reasons
38:28that we got into this terminal is to
38:30build a relationship with the line hall
38:33we took lineh hall in this terminal
38:34first and then they said hey we have a
38:37contractor that's failing and we know
38:38you guys do P&D can you come help us and
38:41as I say we say yes to the customer um
38:44so this actually gave us a small
38:47terminal to learn 2.0 you know in so it
38:50was a great learning kind of first early
38:52adopter uh allowed us to learn allowed
38:55us to manage allowed us to change and
38:57now it's allowed us to grow so we went
38:58from nine routes to what are we running
39:00now
39:01>> 16
39:01>> 16 routes um just in that short amount
39:04of time uh and then we have the 2.0 know
39:06integration.
39:08Um, a little bit of changes in money.
39:11So, kind of I can't go into a ton a ton
39:13of detail. Uh, but to just give you an
39:15idea of how this has changed over the
39:17years. Um, in 2023 we had a special
39:20service charge. They had no idea how to
39:22pay us. We were just like whatever,
39:24we'll figure it out. Um, in 2023 we
39:27renegotiated and the timedefinite
39:30service was based on service. you only
39:32got paid the express bonus for the
39:36packages that you delivered in the
39:38windows, right? So, you're still having
39:40to deliver boxes, but you weren't
39:41getting paid for them. It was great. Um,
39:44FedEx figured out that was not the way
39:45to do business and uh they just started
39:48paying us on all time definite. So, they
39:51just said, "We don't care about your
39:52service. We get you out there trying
39:54here's your bonus." Um, so they gave us
39:56a difference and then in 2025 they baked
39:58it in. So it's just part of the contract
40:01service uh charge went up, stop charge
40:03went up a little bit and it's all
40:05included. Um so there is no line item.
40:08It's very much like large package where
40:10we as analytical thinkers and line item
40:13folks want to know that I delivered 45
40:17time commits at 10:30. I want a line
40:19item and a price for that. I want to see
40:20it on my contract. You won't. It's just
40:22part of doing business now.
40:26Um oh my gosh, so close. Um, and then
40:29getting it right and f future proofing
40:30your business. This is what if you are
40:33not 2.0 or you're buying into a non 2.0
40:36contract. This is what I would ask you
40:39to do today. It's very hard to negotiate
40:42change if you don't know what you're
40:45doing today. If you don't understand
40:48what your service looks like today and
40:50what your contract looks like today. So
40:53get it right today. Right. Make sure
40:56that your stops per resource, your
40:59resource counts, everything is in line
41:02today. Because if you are running too
41:04many resources today and they come and
41:07they look and they say, "Oh, hey, you
41:08were supposed to be at 10 resources and
41:10we think you should be at 12 with
41:12Express," you're like, "But I'm already
41:13at 12, so I need 14." That conversation
41:16gets super messy. If you need if they
41:19say you should have 10 resources and you
41:22think you need 12 today, renegotiate and
41:25make sure that that new contract re
41:27before 2.0 reflects what you're doing
41:30today. So get all your numbers right
41:32today so that when you do go 2.0, that
41:36change can be applied to what seems
41:39correct. Does that make sense? So you're
41:41not doing you're not like undoing and
41:43then redoing it. Just gets super messy.
41:45Um and that's where 2.0 no contracts
41:48seem to go wrong. Um, so make sure your
41:51PCAT and money are in line today. Um, I
41:54did put all the different work area
41:56compositions that you should look at.
41:57Make sure your trucks are right. Um,
41:59your routes, resources, stops are right,
42:02your percent of bulk, make sure you're
42:03checking on that. Know your businesses
42:06and hospitals. So, know that if you have
42:09an industrial area, you are going to be
42:122.0 heavy, right? versus a small town
42:16that maybe only has a couple businesses.
42:19Think about the types of businesses that
42:21need 2.0, right? And then you can kind
42:24of get an idea. So, businesses, schools,
42:27>> doctor's offices, right? If you have a
42:29lot of those on your routes today,
42:31you're going to feel it more than maybe
42:33the other guy that's just like a rural
42:35contractor.
42:36Um, so just keep keep an idea, know what
42:39your CSA composition looks like today.
42:42Um we are at oh mileage um and mileage
42:46and data just keep an eye on that. So if
42:48you have a lot of rural routes you
42:50probably won't have 1030s but know that
42:52data so that when you go into
42:54negotiations for 2.0 you have it ready
42:56for them right we sat down at our 2.0 no
42:59negotiation. And the engineers sat there
43:01with their laptop and I brought out my
43:03laptop and a stack of papers about this
43:05thick and they were like, "Oh." I'm
43:06like, "Yeah, I'm I'm here to we're here
43:09to have a conversation." And I had
43:10everything I needed and we left there
43:12with the contract that we needed. So,
43:14you make sure that you have all these
43:16data points um current stops per week
43:18and per day. Know all this so that when
43:21they refer to something, you're like,
43:22"No, no, no, no. It's actually not that.
43:24It's this." Um, so you can contradict
43:27them and just or agree with them. Uh,
43:29your current dispatch times, know what
43:31those are. Ask them what they're going
43:33to be. Um, expectations. Uh, current
43:36pickups and current returns. Um, and
43:40then predict and forecast your 2.0
43:42impact. Obviously, you're not going to
43:44know everything perfect, but like I
43:46said, if you know that you're in a
43:47hospital dense or industrial dense uh
43:50market, you can make, you know, you can
43:52kind of have an idea that, okay, there's
43:54four hospitals and a a bunch of doctor's
43:57offices. I know for a fact I'm going to
43:59have, you know, 20 pickups or 20 express
44:02deliveries on this route specifically.
44:05And then, you know, exponentially higher
44:07based on the ones that you don't know
44:09that get express deliveries. Um, and
44:12then review your staff. Yes.
44:18>> I'm sorry.
44:18>> Did you receive any money for caps?
44:23>> Um, and then review your staff. So,
44:27you're going to want to review one-on
44:29ones or in a group. Like I said, get
44:32that first meeting when they start
44:33saying like, "Hey, it's coming." Don't
44:35let them hear it from the contractor
44:37next door or, you know, dock talk. Don't
44:40let them be the last ones to know. If
44:42you're hearing something, communicate it
44:44to them. Reassure them that it's not
44:46going to shake the baby and that you're
44:48going to work with them to make some
44:49changes. Um, you can tell them, "This is
44:52what I learned at a conference, right?
44:54That it's not harder, it's just
44:55different. We're going to make the right
44:57moves." Uh, but review your staff. If
44:59someone is already negative about it and
45:01they're like, "I'm not doing this. I
45:03don't want to do it." Start hiring.
45:06Right? You need to make sure that the
45:07team that you have on board is ready to
45:09service the contract in this new
45:11landscape.
45:13Um, and then when you get the offer,
45:16here's some questions to ask. Uh, is it
45:19what they told you? Right? Um, is this
45:22what you predicted? Go back to the prep
45:24work you conducted. How is it different?
45:27Um, what is the resource and truck
45:29impact? They had told us two or they
45:32told us three. We only needed two more.
45:35Um, so that was a a net positive for us.
45:38Uh, run comparisons,
45:40uh, communicate discrepancies,
45:43get buyin from the terminal if there's
45:44anything funny. We talked about that in
45:46the in the renegotiation session. Uh,
45:49and then just have your numbers, the
45:51why, the how. Um, and then the fear of
45:54the unknown.
45:56It's going to happen and they're going
45:58to get it wrong. We have renegotiated
46:00our 2.0 contract in the first year. So
46:03coming out of peak that year, we
46:05renegotiated it three times. One of it
46:07was due to FedEx's request. Like they
46:10got it wrong. Again, we were early on,
46:12right? So we were kind of at the the
46:15early adopter stage. Um so they were
46:17kind of figuring things out. They're
46:18much more streamlined and experienced as
46:21we are. Uh but don't be afraid to accept
46:23the contract, get the data, learn, and
46:26then renegotiate. Um so don't be afraid
46:30of that. It's a I think it's literally
46:3270% of 2.0 contracts renegotiate in the
46:36first year. So, don't be afraid. Um, it
46:39it's gonna happen, but know that you can
46:41do that. Any other questions
46:45about 2.0 or about if it's about money,
46:49you can hit me up sideways over here.
46:51[laughter]
46:53Yes. You want to Are we good on time?
46:57>> Are we We're good on time.
46:59You did get enough money to be less
47:02efficient.
47:03>> Yes. So, end of story, last question.
47:06Very good point. We are making more
47:08money. This was good for business.
47:10Excellent for business. That line was
47:13not just growth. That was revenue. Okay.
47:18>> Profitability was up also. Yes. Yeah. It
47:21was good for business. Yeah. More
47:24packages, more small packages, growth.
47:26Um, again, Mike had mentioned we had the
47:30um the smaller routes, right, but we had
47:32to cover the geography. Uh, with 2.0, it
47:35gave us more density, so we were able to
47:37put more boxes on some of the routes
47:39even though the routes were smaller. And
47:41then just that growth area gave us the
47:43extra um stops and um area to kind of
47:48put that second manager in and manage
47:50the business better. So, everything just
47:52started flowing better. So, 2.0 has been
47:54good for business.

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