The SAF Podcast

Fedex - Shipping your cargo on SAF

• SAF Investor • Season 4 • Episode 2

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In this episode of The SAF Podcast, Oscar is joined by Mike Fulton, Project Aircraft Engineer at FedEx and widely known as “The SAF Guy,” for a deep-dive conversation on how one of the world’s largest cargo airlines is approaching sustainable aviation fuel at scale.

With more than 700 aircraft, making it the world's largest dedicated cargo fleet. Operations in over 220 countries, and aviation responsible for around 80% of its carbon footprint, FedEx sits at the sharp end of aviation decarbonisation. Mike explains how SAF fits into FedEx’s broader goal of achieving carbon-neutral operations by 2040, alongside fleet modernisation, operational efficiency and the use of durable carbon solutions.

The discussion explores FedEx’s recent SAF offtake agreements in the United States, including partnerships at Los Angeles, Chicago O’Hare and Miami, and why higher SAF blending percentages deliver both greater carbon reductions and more favourable economics. Mike also offers rare insight into the realities of SAF pricing, fuel cost sensitivity, and why long-term offtake agreements alone have not been enough to unlock widespread project finance.

Listeners will gain a candid perspective on why brownfield conversions are currently outperforming greenfield SAF projects, how supply-chain risk is managed, and the growing importance of carbon “insets” and environmental attributes for corporate customers.

SPEAKER_00:

Hello, and welcome to another episode of the Staff Podcast. And this week, I'm really delighted to be joined by Mike Thornton from FedEx, a project aircraft engineer known as the Staff Guy. And we are going to be getting into a lot of stuff around what people might have seen recently about what FedEx are doing in uptaking fuel, overall market trends, the role of um airlines, both cargo and of course passenger, in signalling demand for growing sustainable aviation fuel not just in the US, but but globally. So, Mike, it's it's great to have you here with us today. Thank you very much, Oscar. It's my pleasure to be here. Taking a step back from FedEx, how did you end up being involved, interested in sort of leading the SAF conversation within FedEx? What was that journey looked like?

SPEAKER_01:

Yeah, so let me go way back and then I'll come up to that point and answer that question. But uh I joined FedEx back in 2006. I this was building on a 40-year career in aviation where I'm at today. Got my start in the U.S. Navy back in 85, 1985. I served six years there. And over time, my experience spanned most everything from maintenance, engineering, product design, manufacturing, and elements of business development and operations management. But I've always been involved in leading innovations that transform industry. And for the past decade, I've been specializing in alternative jet fuels, and that fits in that category. This is an industry transforming event that's going to take about three to four decades to uh accomplish. And as I started out, this this is my four years in aviation uh this year, and it's clear to me I won't see the end of this journey. So I started focusing on how I'm going to help FedEx engage a great start. And um when I joined our small team in air operations, which we call strategic projects, uh I came in with the expectation that this would be a uh a collateral job. That the boss who hired me at that time he had other things in mind for me. And we would meet the SAF industry, it wasn't even called the SAF industry then, it was the alternative jet fuels industry that was just starting to evolve, uh, which truly began about 2006. And here I am too coming in in 2015, having heard about it for the last nine years, and I had an interest, but I couldn't ever see a way of getting in there and making uh a contribution. And so when my boss sat me down and says, I would like you to work on this alternative jet fuels too, I said, right now I just want you to just create lists, keep up with uh who in the industry is uh promising, and I inherited a long list of promising entities at that time, and I thought, hmm, I think I could do more than just you know monitor and report. I want to be involved, I want to be engaged. This is an exciting space for me. And I turned what turned in what started out as a uh collateral duty, something extra to do, and turned it into a full-time responsibility. And uh I'm grateful to um the leaders I've been working for, some of the smartest people I've ever worked for, the best bosses I've ever worked for. And they've basically put me on the right pathway and provided some guidance, FedEx guidance, industry guidance, and then stepped back and let me go crazy with it. And uh I have. One of the greatest compliments I received about a month and a half ago was when somebody came up and he was meeting me for the first time, and he said, Uh, you're the SAF guy. I said, Yes. And he says, I was appointed to you. And he said, Because you'll talk to everybody. So we we don't necessarily have that privilege to be able to meet somebody and talk to them and engage in conversation. Uh, and I was told you're willing to do that, no matter who comes up. And I do, and I'll set up meetings and uh listen to pitches, first-time pitches. And many of those first-time pitches are uh what as I said, drive-bys who come in and they'll introduce a topic, and I will look at it in earnest, and I'll explain some of the hurdles that uh we have internally that they must meet and not all come back. I'll go, this is too hard. And maybe I'll go somewhere else where it's a little bit easier. Sometimes it's another airline, sometimes it's just a different industry. Um, and that's why I call them drive-by's because I don't see them again. But the ones who keep coming back over and over and over again, after hearing some of the challenges I put in front of them, uh and and they say, Mike, you you said I need to accomplish this. Well, this is where I'm at on it. And then I may have a new challenge for them introduced when they come back with a solution. And the fact that they keep coming back and listening to what I have said, uh it's exciting to me that they're listening, they're working hard. I'm not the only one saying what I'm challenging them with. Other airlines are doing the same. They're finding as they go to the other airlines, they get challenged in the same way. And so the list has whittled down over years. There's some interesting uh players in the market today.

SPEAKER_00:

I want to briefly sort of get an overview, because I'm not sure everyone totally appreciates how central staff is and how big an aviation proponent that FedEx has. Because you've got nearly 700 aircraft of different sizes operating. That's what I read anyway, that might be wrong, but um that's what I've that's what I've seen. And it's so it puts you up there with sort of large airline groups across the world, and obviously, you're not transporting people necessarily, you're transporting things as a as a cargo transporter. So, do you just want to give everyone a sense about you know the role SAF plays in that and the overall sort of aviation footprint that sort of you're dealing with as the SAF guy for FedEx?

SPEAKER_01:

I'd be happy to do that actually. Uh, we should put some context around that, right? So let me talk about the scale of FedEx so we can start talking about how SAF fits. And as you mentioned, we're handling on average about 17 million shipments per day.

unknown:

Wow.

SPEAKER_01:

We're operating in more than 220 countries and territories. So we're a very global customer base. To get that job done, to deliver that many shipments per day, we do operate a little more than 700 aircraft, over 200,000 ground vehicles, and around 5,000 facilities. We've got a long track record for disclosing our GH foot, our GHD footprint around those assets and our activities. So over the last 18 years, we've openly measured and reported our direct jet fuel emissions. Today we are working on a goal to achieve carbon neutral operations by 2040. We've got a three-part strategy as part of that goal. Uh, we first focus on decarbonizing what's possible, using technology that's that exists today to reduce our jet fuel emissions, such as changing our fleet mix, using more fuel-efficient aircraft, and we're focusing on using SAF to decarbonize what's possible. Uh, the second part of our strategy is just co-create with a purpose. To we've basically recognized the potential for the many additive solutions that are needed to enhance our own operational efficiencies that can effectively reduce our emissions. So we continue to work with various stakeholders in the industry to innovate on future solutions, such as creating new SAF alternatives. I can expound on that in depth and improving our fuel logistics. And let me get this last one out because I said they're three. Uh, we know that we're not going to be able to really get it all. So we have to neutralize what's left. So we've been exploring, utilizing durable carbon credits to offset those remaining emissions in the latter part of the next decade.

SPEAKER_00:

So far, a lot of your I just want to touch on the SAF sort of deals, partnerships, off takes, however you want to sort of term them, are predominantly in the US. You had earlier this year you announced a deal with an off take with Neste at LAX, so Los Angeles Airport, and more recently you've done announced an off take with at O'Hare in Chicago with ABP and one with AEG in Miami International. So a lot of your current SAP off takes in the US at the moment, and that's sort of they're the major deals that you've done so far for uplifting SAF. Is that correct?

SPEAKER_01:

It is correct. And why? Because we know our biggest environmental challenge today is the fuel that we use to power our flights. And uh, those are examples of us um taking action to decarbonize what's possible. It's because our FedEx owned aircraft are the biggest source of our direct emissions. Uh we reported last spring 80% of our carbon footprint is due to the air operations, the combustion of jet. Wow. And so, yes, it's a I I like to think of myself as an 80% stakeholder in our uh GHG emissions. It also means I'm I'm holding an 80% liability to yeah, that is a double-edged sword to to uh eliminate those emissions. But uh the lax uh was our first uh in the US. Uh, we agreed to one million gallons of neat fuel that is to be blended and delivered over a one-year period at a 30% blend minimum. Blends do vary from batch to batch, and we prefer higher blend percentages. I could get into that too if you want sometime, um, during this interview or just in a personal conversation with you. But uh uh then uh we were busily trying to figure out what's next. All right, so um these opportunities just aren't everyday opportunities. We have to work for them. For example, the LAX situation, it took a long time to get that done with Neste. Uh we first actually started engaging Neste back in 2011-2012 timeframe. Wow. Developed a wonderful relationship with them and kept that relationship in play for many, many, many years. But the SAF uh uh blended SAF wasn't being made available uh immediately. Um, and when we finally received a solid offer from NestA to deliver blended SAF, and we picked an airport, it was probably two and a half, almost three years ago. It took that long. It was actually, it was three years ago, I remember it well. It took three, almost three years, two and a half years to get that deal done and start delivering. So that was the first. The next, uh, Chicago came a little bit easier. Uh, we had not done business with Nested before, but we had with Airb. And so we had a sound, solid relationship. Uh, they too had a source of SAF. They were able to deliver a blended SAF into Chicago under similar terms to deliver it one million gallons over a one-year term at a 30% or more blend ratio. And the same thing for uh what we're doing with AEG in Miami. Uh, we we want more SAF as the most we can get actually into the gallon that we're purchasing. There's many benefits as to why, but uh maybe you have questions like that as we get further into this.

SPEAKER_00:

Yeah, I think I'm gonna come back to the blending blending point in a bit because I think it's really interesting at the high levels of blending that you are you're seeking and in the staff that you're procuring. But I want to one of the I want to change and talk about one of the big challenges that when you talk about passenger airlines is the percentage of cost that fuel is and therefore the tolerance to pay when it comes to buying, purchasing, off-taking staff, the sensitivity to price is very high because of the nature of those business models. Is that the same for you guys at FedEx? Is it slightly different because is the the makeup of the pricing slightly different? How does it sort of compare and how do you look at the sensitivity of pricing with regard to SAF? Yeah.

SPEAKER_01:

I don't believe we're that different uh as far as how sensitive we are to fuel cost. I mean, if you look at what's going on out there, you start digging into fuel cost, you start looking at operations, you find out quickly that airlines that uh the fuel cost is in the range of about 20 to 50 percent, depending on their own operations. Labor is another very large part of the operating budget. 20%, if you look into our um our disclosures over the years, you you'll see we're probably closer to that end of it. Some of the other airlines are closer to that end of it, and some um maybe smaller operators. I haven't looked at each one independently, but uh they start approaching more towards the 50% side because they have less overhead. When you get large, you build more capability and overhead in what you're doing. So maybe fuel becomes a smaller percentage as you get bigger. But for the most part, we are highly sensitive to paying for premium-priced SAF because it's an added expense, it's a variable expense, and it's subject to supply chain shocks, just like the oil and gas industry has shown us over the years. We've been buying jet fuel for well over 50 years now, and we're quite good at uh managing our jet fuel supply chain. Uh, bringing SAF into that mix is not easy. And maybe we could touch on some of that, but uh I don't believe we're that different on the cost sensitivity to answer your question.

SPEAKER_00:

And with the the length, another thing that lots of people are asking of airlines, which may or may not be feasible all the time, is long-term off-take agreements that cover financing of future projects when you're looking at those sorts of off-take agreements rather than you know buying staff that's already being produced by other producers. Are you sort of looking at would you be tempted to go into sort of that model, doing sort of the off-take agreements for future producers? Where do you see your role in sort of helping scale the industry as an airline? Is it purely by buying staff that's currently available over sort of year terms, or do you see the sort of the role evolving into the long that longer-term off-take agreement model as well?

SPEAKER_01:

Well, we were one of the first in the industry to sign an off-take agreement. And we did sign an agreement with a promising Northwest producer, somebody that wanted to build a plant in the Northwest. Uh, not all of these off takes turn into fuel being produced and delivered. Yeah. Uh, and not all offtakes, I must tell you this too. It's very important to understand this point. Um, because there's a lot of information out there in the public domain that uh may mislead uh as to how many off takes are actually out there. There are off takes that do not make it into the public domain. There are agreements that are in place today that you just don't hear about. And so we have certainly experimented in the off-take space. We continue to experiment there. Now these short-term offtakes, these are off takes. What we did with LAX, Chicago, and Miami, those are off takes. They're shorter term. And we're making great momentum with those because the staff is being made available today. And what's the key difference? One of the key differences is we can be assured that the price that we lock in for one year is something that we can live with and that they can deliver the fuel. We're confident in that. We have ways of managing SAF shortfalls and small volumes. But locking in a long-term offtake is a little bit more difficult. So you're committing yourself to a supply chain, and typically the long off long-term offtake agreements are with aspiring producers, somebody who's not producing today, and they need that offtake to get financing. And you're working to lock in a price uh structure over periods greater than five years, and sometimes up to 25 years in length. Nobody can tell you today what that market's going to look like for a period that long out. There's just too much uncertainty involved with that. So we have to set some pretty bold and difficult criteria as part of the off takes it makes it that makes it quite challenging. And that's why they often take so long to be signed. Well, even the short-term one, as I explained earlier, took a while. Let me reference a report I read about this time last year. I haven't looked for it again this year yet, but uh Argus did put out a report last year. And if you kind of dig through it, I think it was in October, um, you'll find uh a discussion in there about uh somewhere around 73, 74 off takes that are currently signed. Um that's a that's not all of them. That's just the only only the ones that they could find in the public domain. Of those, none of those are producing. And I I I want to add that uh the reason for the off-take early in the the offtake approaches is to achieve financeability. I have as an off as a as a vendor who wants to produce staff, they can demonstrate that they have an end customer long enough so that they could pay back uh the capital that they need to build out the facility and reward the investor for having made the investment. That model hasn't been working. That's why there's 73 plus as far as our Argus had published. I guarantee there's far more than that. That model just isn't working. You can't just sign an off take and go uh to the finance community and say, I've I've got a customer, now fund me. It hasn't been working.

SPEAKER_00:

Yeah. So I mean, I'm I'm gonna put you on the spot now. You said that model is not working. Have you you got an alternative? Well, because it's a fundamental challenge that lots of people are facing. They're trying to come up with more creative ways, whether it's to create different ways of signing off traits with different parties or get innovative, but it's something that lots of people are looking at and still don't aren't quite working out, and that's why there's a lot of hesitation across the investment landscape around investing in staff projects globally.

SPEAKER_01:

We're all trying to figure this one out right at the moment from many different angles. Um, we airlines, when we get together, uh, and even recently we survey surveyed ourselves, and one of the things that bubbles up to the top always is the capital needed to build these facilities. But what are we typically talking about? We're talking about standing up a new industry that requires building new facilities. Uh, we kind of refer to those as greenfield facilities. It's there's nothing there, and then you build a plant, and then there's something there. But we also have other ways of getting there. Um we're able to use existing assets that are in the world today, and those are often referred to as brownfield facilities. These are assets that are either have been identified to achieve a different purpose, and they go through a conversion from an existing purpose to providing a new value stream, which is what our friends up in Montana are doing right now. They had an existing facility and they began producing SAF at that facility. That was an example of a brownfield conversion. They had to do some upgrades to be able to produce SAF. Then there are decommissioned facilities where there are assets in place today, and people do come in and they buy those assets, and then they refit those assets in a way that they can produce a new product. What we're seeing today are the brown can brown field conversions are working. Uh I I have to say that I'm extremely proud of uh one entity that's in Silverton, Georgia. They recently announced that they are now producing today, Alcohol to Jet facility. And that is the first greenfield facility that I could think of. I can't think of any other, that started with nothing and then became a SAF producer without having leveraged assets as part of a brownfield conversion. So that's that's an industry first right there. Um they're just getting started, they haven't been addressed test entirely yet.

SPEAKER_00:

Yeah. And for those that aren't aware, Mike might be deliberately not saying the company name, but I I can. So um if anyone from Lanza Jet's listening, congratulations to you and um all the work you've done to get the um the project in Georgia, Freedom Pines up and up and running. So um that's fantastic news for the industry, and I think everyone knows how hard you've been working on making that work. Um, but coming back to I want to come back to the blending portion of what you talked about earlier. You've got really high blending looking at over 30%. Is that purely because FedEx is looking for the greatest carbon savings it can from the SAFIT's using, or is there an alternative, is there a sort of an alternate motive beyond that, that reason for having such a high blending blending percentage across those agreements?

SPEAKER_01:

I'll I'll dig into that a little bit for you. It's motivated by a couple of factors. Let me start with the first. So when a gallon of SAF is produced and it meets the specifications that it needs to meet to be blended with jet fuel, and then once it's blended with jet fuel, it can meet the specification that's needed to go into our aircraft. There's a cost to get there. Uh, there's logistics involved in moving that product to a place where it can be blended, stored, and blended. There's a cost associated with blending it. The cost of blending is based on the finished gallon. Not the gallon that goes in, but the gallons that come out. And when you blend at higher blend percentages, you end up with a smaller amount of gallons coming out. So economics is a major part of why we prefer having higher blend percentages. And two, uh, we are displacing more of the carbon as part of it. And those carbon attributes are highly valuable to us and to the world, and we're digging into that a little bit today.

SPEAKER_00:

The economics point of that's that's really interesting. I think the the carbon intensity portion kind of speaks for itself. But the the economics of actually being cheaper to blend at a higher, higher percentage is is probably something that not everyone immediately considers. And I think widely across the industry, the supply chain management is a problem as the industry develops that's not immediately in everyone's first, is it sort of immediately on someone's list? It sort of comes slightly further further down. But you with your background and the work you guys were doing at FedEx, it must have been a forefrontal consideration the whole time about managing that supply chain and making it economically as viable as possible to mitigate the high costs of procuring staff.

SPEAKER_01:

Yeah, I I I'm gonna dig into it a slightly different way, too. Um, off takes typically are based off of uh with a SAF supplier. Let me start with that. Uh off takes with a SAS supplier are typically based off of a volume of fuel to be delivered to over a period of time, a fixed volume. Where our jet fuel buying practices are based off of forecasts, and we continuously update our forecasts, and we're able to provide those numbers that there's some variability in here, and that is about how much fuel we're going to take at that airport during a period of time, and we work our arrangements with conventional jet fuel um suppliers in that way. But the SaaS suppliers are looking for fixed numbers, and so um you have to look at it this way, too. So this is what I noticed immediately with the offtake we had up in the northwest. It became a huge concern of mine based on the airport where we were taking the fuel. So this is a complex topic, but over time, our fuel use at a given airport changes because we redesign our network, we're continuously redesigning our network. We may fly more through an airport for a given reason or less. And so um if you're blending lower numbers, you're ending up with larger volumes of fuel. And so you definitely need to be able to manage that fuel supply in an air into an airport where you can effectively not have too much fuel as part of the process. So that's why blending up high and leaving enough overhead makes the most sense because we may make changes to our network in that way. And we've just told that supplier, we will take, say, for example, one million gallons of your SAF over a year. What happened? Things can happen. Uh, things might not be so perfect in the world at a given airport that we've uh made arrangements to take the SAF. Uh, so we do have some flexibility in a region to say, well, this event happened. It's beyond our control, but we do have another nearby airport. Maybe we could shift the supply over there uh for now. So we do have that capability as well.

SPEAKER_00:

You've got done deals with full fuel producers like Neste, they produce fuel, and you've got an agreement with AEG, who's a fuel supplier who is sort of within the supply chain. Which are there differences between working with those two entities and or is it broadly the same dealing with a producer and a purely a fuel supplier? Because obviously in Europe, when we're talking over here, fuel suppliers are mandated parties, not necessarily airlines and not producers. So there is a policy difference in the way you sort of look at where fuel suppliers sit, but not in the US. So, how are there any differences between dealing with those two parties?

SPEAKER_01:

Uh let me make sure I understand the question correctly before I go in there. Uh, I have interpreted it one way and you may have meant it another way. So let me just um answer. And if I'm not on track, stop me and let's get me on track with the way you framed this up. So uh we have producers who have the ability to deliver final product. Yeah, they might not necessarily be the ones who produce the product, but they are able to buy the SAP, blend it, and then deliver it. These are producers of Jet A today that are delivering today. Then we have what I call midstream suppliers, they don't produce anything, they just manage the fuel supply. They are involved in uh we may buy the fuel, we may have an agreement to store somewhere, and they're involved in the process of taking that fuel and making sure we get it all the way into the wing sometimes, and maybe just into the airport storage at other times. Is that the way you frame this up? Yes.

SPEAKER_00:

Yes, nuances between those two different parties. Are there any differences in your experiences of dealing with them? Should they be treated differently?

SPEAKER_01:

Are they being deep? Uh should they or are they? Uh I I want to say this, frame it up this way. We already have relationships with both sets of parties. We have long-standing experience with them. So we understand uh their role. And um I don't see us treating them differently. Maybe we are, because I'm not the fuel buyer. I'm not the one who's actually working these deals. Um what we're doing right now is saying um during this next year, we want staff. Who out there can deliver the staff, and they come to us with terms, no matter who they are. Yeah, yeah.

SPEAKER_00:

No, fair enough. One of the one of the interesting sort of tensions that have been pulled out is that you mentioned earlier when we're talking about staff facilities, brownfield sites are currently the successful model. We have now have a greenfield site. You're talking about people you already know and have done business with and understand and sort of through that mitigate risks versus new players. That's one of the big challenges around next generation staff developing and growing the the new nature of it, the unknowingness of what where the risks are, what the risks entail. So, do you want to sort of touch on maybe slightly broader than just FedEx about how the industry goes about changing and adapting to this huge challenge?

SPEAKER_01:

Those those uh the majority of risks that we know today are managed contractually. All right, so it's a risk share arrangement between a producer and somebody that's at the end of the supply chain. And so we manage most of that contractually, so we know what to do when these things come up. There are there are differing ways to manage it. If a SAS supplier just can't deliver, then we have mechanisms in place to make sure we get our jet A. That's very important. That's the most important thing. That uh we we have a uh a durable and cost-efficient supply chain of jet fuel so that we can meet the lift requirements uh that are demanding us to meet to deliver the packages that come our way and the envelopes, and so uh typically the most of the contingencies have been planned that way. As we want this, and we have a mitigation strategy in place to make sure we get the fuel. The emissions that come out of the tailpipe are exactly the same when you burn SAF as they are when you burn jet uh conventional jet fuel. There is no difference. The car, what we kind of talk about is uh uh lower emissions, it's more based on a life cycle calculation. It's once you've burned the fuel that creates the carbon and carbon equivalent emissions, those go into the atmosphere, and then there's a life cycle recycling of that carbon that ends up back into the fuel, and we've got calculations on how that works and it evolves the feedstocks that we use. Uh, so I I do want to make sure I'm being responsible when I'm talking about this because um it can be confusing for somebody that isn't aware of what we're doing. Yeah.

SPEAKER_00:

No, it's um it's an important distinction because there have been situations. There's been a situation last year with um the advertising standards agency here about the use of the word sustainable and how that can be potentially misleading. So I think you're absolutely right to be deliberate in in the words you're using to describe what we actually mean when we're talking about the full life cycle of staff and where the emission savings actually come from. So I don't think anyone can um have any qualms with with you deliberately choosing your words. Um one of the things that airlines are doing a lot is that they have the benefit of selling scope three certificates to corporate customers who fly on their um who fly on their airlines, and that helps them mitigate the cost to share some of the increased cost of staff. And I'm curious about to what degree this is a strategy that FedEx can use, is using, and Whether the extent to which it's applicable, because obviously you're not flying corporate customers in terms of people that work for big corporations. It's a slightly different distinction if there is any opportunity to do something like that at all.

SPEAKER_01:

Okay, well, let me talk about it this way. Let's talk about what we're managing first. All right, so I like to look at SAF as two value streams that must be managed. The first value stream is the liquid fuel product that gives us the energy to move our planes through the air. And that ends at the very point we combust the fuel. The second value stream are the carbon attributes, the fuel attributes, that are used to demonstrate how use of that SAF provides a lower emissions, carbon intensity value over time. Over time's key. Managing that supply chain. Alright, so let's get into that a little bit. So when we have a producer out there who's identified the feed stocks that they're going to use and the logistics, all of what goes behind in managing that new fuel, that carbon value, that carbon reduction value is being built in at that stage. And so there has to be a lot of trackability, traceability, and auditability of that GHG reduction that pass that comes to the producer who produces the gallon of fuel. They too have processes that affect the carbon intensity score that's eventually assigned. And then there's the delivery process and the blending processes all have carbon intensity values that must be weighed. And so there's an entire supply chain of trust that needs to be built in with full transparency. And then when it comes to FedEx, we've got fuel that we need in our aircraft. And now we also have this what I like to call as the environmental benefits that come with that fuel and manage that fuel with our customers. And that's where you're going with this. So we we have experienced over time. And sometimes you're the majority of our carbon footprint. And so we've heard about this stuff called SAF. And we want to work with you on that some way, somehow, to lower our carbon footprint. So the light bulbs are going off of my head, like I think in other airlines, about the time we're probably seeing similar activity. It was somewhere around 2018, I can remember. I go, oh, so this might be how I pay for it. And um, so they the buyers of these SAF certificates need to be able to trust the information. And so you have to stand up a system inside of an organization, or you contract out through a third party to help you manage that value in a way that you work with your customers. Uh I will say that we're looking at it. We're trying to determine uh exactly how we're going to work with the carbon attributes that we've been entrusted with and work with our customers in a way that they could participate in that activity such that they can apply the carbon reduction to their own carbon footprint. And we have an ability to apply a reduction to our carbon footprint as part of the process. And the industry in the world has faced a lot of trust challenges over time with carbon offsets. Um it's just one of those uh really difficult conversations to overcome when you see announcements come out that there's an airline or some other entity that's uh been challenged about some of their claims and legally challenged, and a lot of it being around carbon offsets. And so we started referring to these as insets, as uh not because of offsets we're being challenged, but insets because it's part of our supply chain where the value is being created. We're not buying from uh outside of the supply chain as a way to offset our own carbon. We may have to do that someday. But right now we're focused on working with our customer on the carbon attributes, the environmental attributes that come with the SAF in a way that they uh can show that they too have a lower carbon reduction. Now that it's not just from those assets alone, passing those assets through. There are other means for them to lower their carbon emissions. So we're enabling our customers over time, we're working through this now, with choices so that they understand that the choices that they make can affect the carbon outcome of the package that they've entrusted with us to deliver.

SPEAKER_00:

I want to ask one final question. And it's not it's not a small question, so I'm gonna I'm gonna say that to begin with. Um to what degree is FedEx's work in the staff space purely an exercise in decarbonising FedEx's operations versus an exercise in decarbon in helping decarbonize wider aviation? Because there are some airlines that very much see it as their role to decarbonize aviation and do as much as they can to help grow the ability of staff to help decarbonize the industry, whereas there are some others that are seeing it very much more as we are doing our bit by purely decarbonising our own operations to the degree that is feasible for us. And if this was a spectrum, where would you sort of sit FedEx on that scale?

SPEAKER_01:

There is a there is a competitive nature involved in the airline industry, and if you're doing business with customers who want you to reduce your carbon footprint, and you're not taking action to do to focus on yourself and reduce your own carbon footprint, and then they step back and look at the industry as a whole and they go, Well, there are others who are. And so I have choices to make. And so they they have to weigh all it's a multi-attribute decision situation where you you weigh your own values as a company when you're making a choice who you're going to work with, you weigh the economics, you weigh your relationships, and trust that you're that the entity that you're working with is actually able to deliver the job that you're wanting them to do. There's so many variables that play into this. But we are starting to see some trends around choices being made around uh a company's efforts to decarbonize. We're starting to see some choices like that. So you do need to be focused on both, being a key player in the industry to help each other uh move forward in decarbonizing. We kind of in my community right now with the SAF community, we do we're cooperating to compete. And not so focused on ourselves in those arenas. We're focused on working together to enable it, and we're sharing information openly in a way that helps each other learn. And we are moving forward cooperatively that way and helping the industry decarbonize as a whole. Uh yet individually, we know our own carbon footprints, we know where our carbon's coming from, and we're we have to take actions independently to keep ourselves relevant to our customers.

SPEAKER_00:

Excellent, Mike. Thanks. Thanks so much for that. That was um excellent. I we could go on for hours talking about this. We might have to get you back at another time at a later date to continue this conversation. Um, whilst I've got you, I'm also going to send you some tracking numbers because um some parcels of I'm expecting to be delivered, and I just want you to follow up on those. So if you could do that for me, that would be great. Um, I'm kidding, of course. Um but thanks so much for for that. That was a a tour of force in everything that FedEx has got going on in the South space and the wider industry trajectory that I'm sure listeners will massively benefit for. So thank you very much.

SPEAKER_01:

Well, if I could leave you if you're quite welcome. And if I could leave you with anything else, uh uh this is a very exciting space, it's a growing space. Uh there's momentum to keep moving forward. Uh, there are headwinds, tailwinds that help, and we do have some crosswinds. Uh, this is not a flip-the-switch uh industry. This is an industry that's built around safety, ensuring safety, safety being number one. So we start with ensuring the fuel is absolutely 100% positively safe and consistent. I love being in this space. It's the most exciting job I've had, and uh you can expect to see far more coming from FedEx.

SPEAKER_00:

Excellent. Well, that's great to hear, and we'll keep an eye out. Thanks again, Mike. You're quite welcome. Bye bye.