Operator: The next question comes from Jeff Kauffman with Vertical Research Partners.
Jeff Kauffman: Thank you for the detail on DRIVE. Jeni, welcome. Look forward to working with you. Real quick, the puck doesn’t stay in one place, it’s always moving around, and I think you’re alluding to this with what you’re doing with DRIVE and Tricolor. But I’m just kind of curious from your perspective. We announced this plan about what year and half ago back at the analyst meeting almost two years ago. How has the network design and some of the DRIVE goals when you’re completed with this changed since you began this process?
Raj Subramaniam: Well, I think we introduced Tricolor in the last conference call and I think this design is just being put in place as we’re speaking here. And so in terms of the DRIVE commitments, we had originally talked about $4 billion by FY25 and less than 50% in FY24, where we will hit those numbers, right, for FY24 and on track for FY25. And again, the other part of it, of course, is Network 2.0, which we said $2 billion by FY27, and that’s underway. So with the focus on making sure that we have structural cost reductions, we have network redesigns with the whole FedEx portfolio in play. And the idea that we are moving forward on our digital tools, all three are working. And I think we’ve got work to do but we made some good progress. John is going to add more as just said.
John Dietrich: I think what I would add to that as well is, to your comment about kind of changing environment, the teams meet weekly on this. And there are some programs that are delivering more than we expected and there are some programs that are delivering less than we expected, but we’re always looking to fill the pipeline as well on additional opportunities. And that’s an ongoing project and that speaks to DRIVE being part of our culture going forward, that’s not going to stop. And we’re going to adapt to a changing environment and I think that will help us as we move forward.
Operator: The next question comes from Ken Hoexter with Bank of America.
Ken Hoexter: So Raj — and I guess I love the results in terms of the speed here at Express, but I’m confused a bit by the messaging. Last quarter, you talked about seasonal declines at Express and what occurred from Express going down to — which should be maybe near breakeven given the seasonal moves, yet it was up so significantly 130 basis points year-over-year. Was there a massive shift in the DRIVE or other programs or your speed of execution? Because it sounds like from what you’re saying on the targets, nothing has really changed. But I’m just wondering what shifted intra-quarter so much that we’re now seeing this quick of an improvement? And then just a side clarification. Did you say Canada was about to be rolled out, because I thought you had already said that with Hawaiian Alaska, Canada was done. So maybe I wanted to clarify that.
John Dietrich: I’ll start with the last one. It’s about to be rolled out. It has not been completed and Brie can talk more about that in a minute. But Q3, as I mentioned earlier, was a combination of things. We saw, while the revenue was soft, we’re focused on quality revenue, the cost controls were solid and strong and there were some other levers that were alluded to earlier. As you can see, variable comp, for example, is down. So that was a contributor. But all these things taken together resulted in us and our focus on improving our results for Q3.
Brie Carere: And Ken, I’m just happy to clarify, from a Network 2.0 perspective, the Canada plan has not changed. Alaska and Hawaii are done and we are beginning the rollout of the integration in Canada that will begin this April, and we will be done before peak and it’s on track.
Operator: The next question comes from Brandon Oglenski with Barclays.
Brandon Oglenski: Maybe if we can follow-up there on Network 2.0. Raj, I think you mentioned you’ve made some management changes on both Ground and Express surface operations in the US. Can you talk maybe a little bit more about that and how that plays into long term integration?
Raj Subramaniam: I think first of all, Network 2.0 is on track. Let me just take a step back here. You’ll recall that we said we plan to deliver $2 billion in savings by the end of fiscal ’27, and we are taking that measured and deliberate approach. And as we just rolled out our new leadership structure in the United States, and it’s obviously a much more streamlined structure and much more effective structure and essentially with the goal of putting one truck and one neighborhood design into action. We are encouraged by the early results we’re seeing in the initial rollout as well so far Network 2.0 model on the whole [teed] approximately 10% reduction in P&D costs and maintained very strong service levels. As we become more tech enabled in this regard, we’ll deliver even greater improvements.
And as we have already talked about, we are focused on implementation of Canada before peak. And I’m also happy to say that I’m very excited about Network 2.0 from a service perspective because it will drive a better customer pickup experience. So we are on our way, on track and again, some ways to go.
Operator: The next question is from Scott Group with Wolfe Research.
Scott Group: So John, this year is $1.8 billion of DRIVE savings and you’ve talked about $900 million of offset. So about $900 million of actual profit. As we think about fiscal ’25, do you think the actual profit improvement should be closer to the $2.2 billion of DRIVE savings, or do you think there’s another year of material offsets to that DRIVE in fiscal ’25? And then just separately, just — no one’s asked about Ground yet and it’s by far the biggest part of the business. So if I can just ask one on the margins 12% this year. Do you think there’s further margin improvement to go at Ground?
