HelloPackage Podcasts

HelloPackage - Founder & former CEO of FedEx Ground discusses the future of package logistics at apartment communities.

June 04, 2019 Season 1 Episode 2
HelloPackage Podcasts
HelloPackage - Founder & former CEO of FedEx Ground discusses the future of package logistics at apartment communities.
Chapters
00:00:00
Introduction - Dan Sullivan.
00:01:00
What is the history of FedEx Ground? How did everything get started and what made you think you could compete effectively with UPS?
00:09:44
What do you think motivated FedEx to recently go to seven-day per week delivery?
00:12:32
Where do you think the last mile logistics business is going?
00:15:39
Why did you invest in HelloPackage? What problem do you think it solves over the package lockers? (FedEx knows a lot about package lockers)
00:23:11
What role does Amazon play in that future? How should apartment owners think about picking Amazon as a package solution?
00:26:54
What role do demand economy carriers like Shipt, Deliv, Uber, etc. play in the logistics business?
00:34:10
What else would you like to communicate about the future of the carrier/logistics business?
HelloPackage Podcasts
HelloPackage - Founder & former CEO of FedEx Ground discusses the future of package logistics at apartment communities.
Jun 04, 2019 Season 1 Episode 2
James D. Grady
HelloPackage - Founder & former CEO of FedEx Ground discusses the future of package logistics at apartment communities.
Show Notes Transcript Chapter Markers

Recorded Tuesday, June 4, 2019

Dan Sullivan and Jim Grady.

HelloPackage (www.hellopackage.com)

To listen to this podcast, click on the green button above. See the Chapter Markers and/or the Transcript tabs to move to the podcast section most interesting to you.

Below are some details about this podcast:

Dan Sullivan, the Founder & former CEO of FedEx Ground for ten years discusses the future of package logistics at apartment communities. Dan talks about the history of FedEx Ground and why FedEx recently went to delivering seven days per week. He also provides some thoughts on Amazon as a carrier and how demand economy carriers such as Shipt, Deliv, and others might evolve. Listen as Dan shares his ideas.

Guest: Dan Sullivan, Founder & former CEO of FedEx Ground, and the current Chairman of the Board of Snider National.

Moderator: Jim Grady, Founder & CEO of Package Solutions, Inc., the makers of HelloPackage.



Speaker 1:
0:00
So today I've got Dan Sullivan who is the founder and CEO, a retired but founder and CEO of Fedex ground and a work for Fedex for 10 years, reporting directly to Fred Smith. And uh, so Dan is an investor in a packaged solutions, which is the maker of hello package. And, um, so Dan, I appreciate you being on and what I want to do is just ask you a few questions here and get your perspectives around the whole last mile, logistics e commerce and kind of where all this is going. And this is a particularly topical time because a Fedex, uh, after going to six day delivery announced, um, last week, it's in Wall Street Journal that they are now moving to seven day delivery, which is really hard to get your mind around, but they are effectively going to compete with postal and Amazon and everybody else. So, uh, I don't think ups has announced yet, but, um, so Dan, let me start with, um, and thanks for being here. Just want to start with, uh, you know, what, what's the history of Fedex ground and uh, you know, how'd you get started? And what made you think, ah, at that time, uh, that you could compete with ups, which had been around for a long time, when you decided to compete with them and love to get your permission?
Speaker 2:
1:18
Yeah. Well, uh, thanks Jim. Good to be with you today. Uh, early, uh, in, in the 1980s, uh, had become a apparent to me, and by the way, I had been in the trucking business, uh, four Oh, uh, roughly, uh, eight or nine years by that point. A, but that ups had a virtual monopoly in the small package to every marketplace. Uh, they really claimed that the u s s well was there competition and drove a lot of, uh, the pricing, uh, issues that, that were prevalent actor at the time. But again, and understanding the service far structures of, uh, both of those entities, uh, I, you know, if they weren't a monopoly, they were very close to it. So I thought that there was, uh, Opportunity, uh, in that, uh, in that space. So in 19, uh, 83, I started to put together a team on Pittsburgh, Pennsylvania to try to better understand, uh, uh, small package delivery and, uh, put together a business plan that, uh, we, we talked, uh, uh, would, uh, would make a lot of sense and could compete against a ups, but to participate, uh, we had to differentiate ourselves in the marketplace to how to be a reason, uh, for any customer to switch from ups to, uh, to our company.
Speaker 2:
2:54
Didn't have a name at that point, we'll call it Rps, uh, which was the, that, uh, uh, that we use before merging with, uh, with Fedex. So that was number one. We had to differentiate ourselves with the customer. Number two, we had to close, uh, what would be a huge cost gap, uh, between any business we would bring to market and a ups because of their overwhelming, uh, density that they enjoyed, uh, in the marketplace at that time. Uh, I can get into a lot of detail of, of where we got to, but we travel the world really to try to understand that patent logical approach to this. Uh, using barcodes, scanning and, and sophisticated, uh, uh, conveyor systems, uh, in our, uh, in our operation, uh, that made us faster. Uh, it made us more cost effective. Uh, it allowed us to provide information, uh, to customers, uh, which was totally, uh, totally critical from all the research that we'd done that we, that we did up to that point.
Speaker 2:
4:05
Customers wanted to know where their packages were all along the delivery cycle, the pickup to delivery cycle. Um, and you guys were the first ones to do that, right? You're, the first one is to put actual barcodes on packages and track them through the seaway. Yes. The way we did it, uh, Fedex Express, uh, did have, uh, labels barcodes on their, uh, on their labels. But, uh, of course it was mostly envelopes and very small packages. I mean, what we did was what was different when you think of a 75 pound package or a one pound package and the differences, there's so many different size packages. How were we going to convey, uh, this myriad of packages and still be able to capture the information that we needed to short the package and then again, use that information, uh, to, uh, allow the customer to understand where their packages, where their packages were.
Speaker 2:
5:09
Uh, we also, uh, were able to, uh, use technology based engineering, uh, and planning tools that we thought gave us an edge. And then finally, uh, uh, we came up with the idea of using independent contractors, uh, in our, uh, in our operation, uh, and really with a settlement system, uh, that, uh, paid or, or settled with the contractor at a, at a greater rate, uh, or a rate based on work performed. So the more work that an independent contractor who did the more settlement that contractor, uh, could earn. So it really motivated, uh, our drivers to be very productive. So when you put all back together that that is basically what we, what we came, uh, uh, to market with. And when, when we announced this in the Wall Street Journal, uh, ups his retort, and by the way, we kept this total traps, uh, believe it or not, uh, planning for about 18 who we were going to do this till we announced it in a one page ad in the Wall Street Journal the next day.
Speaker 2:
6:24
Well then I think you said you played it for 18 months, is that what you said? That's right. Yeah. There's totally secret stealth mode, right? That's right. And then the next day in the Wall Street Journal, ups came back to say, listen, if you deliver packages on time, then you don't have to provide information to customers. And when I heard that, I knew we had them. I knew we had them because they didn't understand what customers really, uh, really wanted. Uh, and so what year was that again? What year was that when you launched in 1985 is when we launched March 11th, 1985. She wanted to know the exact date. So, uh, yeah, so that would, that is basically the essence of, uh, uh, of what we did. And by the way, to understand this, uh, this technology we do, I travel around the world, really through Europe, looking at all kinds of postal systems, uh, to Japan, to China, uh, looking at small package delivery companies there that you, some sense of barcoding or scanning a different ways.
Speaker 2:
7:36
They constructed a designed conveyor systems, that kind of thing. And since we put all that together, we were able to come up with our own concept, which we patented, uh, uh, subsequent to our commencement of operations. So, uh, and then, uh, the rest is history. We, we became the, you know, the fastest growing, uh, transportation, uh, company in history. I guess I've up to, uh, uh, the, you know, first. So through those first 10 years, we were profitable in the third year and, uh, grew exponentially, uh, through time. So it was a very turbulent FedEx officially as a interview. You, we merged the companies in 1998 then we a rebranded, uh, uh, my company Rps, uh, to Fedex ground in I believe 2001 or 2002.
Speaker 2:
8:36
Oh, that's a great story. And, um, so the, uh, today, I mean Fedex ground is a very big part of Fedex, right? I mean, it's, uh, uh, absolutely, uh, it's, it's probably, it probably say it's the crown jewel of, uh, uh, Fedex threat right now. Really? It, uh, uh, maybe a, I don't know, 30% of its, uh, uh, volume, but clearly a half of its profitability. Um, half of it's earnings before income tax, uh, which, uh, I think it's fantastic. So I'm very proud of where it's gone. We, you know, we, we picked up I think 176 packages, uh, that first day, March 11th, 1985 today, uh, Fedex ground delivers over, uh, uh, delivers over 60 million packages a day. So it's a, it's ground or $20 billion organization. And that's a, that's a huge accomplishment. Amazing. Amazing. Congratulations. I mean, the, the, so, so what do you think I'm motivated Fedex to go to six day delivery.
Speaker 2:
9:51
And what do you think motivates them now to go to seven day? I guess we don't have an eight day, so they're out of days. So what do you going on? That's a big cost to do that, right? To set all that up for another. Yes. Uh, I think so. And I think the sixth day, uh, operation is having some negative impact on their, uh, operating margins. Now. Uh, don't know that for sure, but reading, uh, some of the, uh, earnings releases and, and other things, I think that's happened, but look, why are they doing it? Uh, just the same reason why we're getting into the business. We are, I think the rising tide of ECOMMERCE, uh, it's growing at, I dunno, 20% a year. That's gonna Continue, uh, ecommerce's 10% of the total retail sales today. That's never gonna stop. That's good. It's gonna continue to increase.
Speaker 2:
10:53
Uh, Fedex ground is, is, uh, uh, is still gaining market share. They need to increase capacity. Um, they, uh, they need, uh, uh, the same day or next day. Delivery is important to these retailers now a range of when any order is shipped. So for an order or orders place, I should say, if someone goes on online at Walmart and, uh, or do something today, they want it today or they want it, they want it tomorrow. Uh, as far as the, uh, I think, uh, uh, Fedex ground is also, uh, we'll also start to divert their smart post packages. Uh, now these were packages of picked up and, um, and fed into the u s ps network for last mile delivery, uh, to the customer. But when you do that, you lose some time, probably a day, maybe more depending on where it's placed into the postal a network. So these, uh, these smart post packages in my mind will be, uh, will be diverted to the, uh, ground network.
Speaker 2:
12:04
And when that happens, they're going to need the capacity to whoever I'm on Saturday and on Sunday along with the, but the other five days. So I think those are probably the, those are probably the key, key reasons. Growing e commerce that the need for increased capacity, same or next day delivery. The diversion of smart post packages, uh, to the ground network from the postal network. Uh, all to improve, uh, to improve trains at times. So we know we have a lot of people listen to our podcasts and our communications that are apartment owners. So where do you think, like, where do you think this last mile logistics thing is going as it relates to, you know, in general of course, but in particularly as an apartment communities, cause they're kind of the point of the sword, right? They have a lot of people very likely to order online, you know.
Speaker 2:
12:57
Um, so where do you think that goes from? Some feel for that? Yeah, that's a, that's going to continue as I, as I just said, uh, uh, again, if, if only 10% of retail, uh, packages now ordered online, that's just gonna increase tremendously through time. Uh, I think that what growth is 20% a year, um, that's going to continue. So, uh, it just makes, it just makes sense that people, uh, uh, that live in a decent apartments, residents of these apartments are ordering online, uh, like, uh, like anyone else. So, uh, I only think that, uh, this last mile logistics is it's gonna, uh, going to continue to, uh, to grow. Uh, more and more retailers will deliver. There will deliver their own packages. Uh, they're, they're moving, uh, to build more dcs and, and dense densely populated cities. But, uh, more distribution. Yup. And a delivery from a, their stores, uh, will, will also increase.
Speaker 2:
14:14
So, I mean, you're going to be able to, uh, go online, uh, order something from Walmart if that product is at the local store. It's coming from there to, to your apartment, uh, uh, there. So, you know, all of this means that, uh, uh, that there's going to be, uh, many more delivery drivers, uh, in, uh, in, in larger cities and, and much beyond the Fedex ups or postal service driver, uh, Uber like a delivery or, uh, uh, or companies like shipped and, and, and others will be delivering this, uh, this kind of product. So there's an absolute necessity to build something in these, in these, uh, multi unit apartment complexes to accept growing number of packages from a growing number of drivers. And I think with the work that, uh, that we're doing that you're doing, uh, to, uh, to improve, to continue to, uh, to expand the, uh, the smart software that we have is, is, is what is absolutely necessary, uh, to, uh, manage, uh, uh, this kind of work.
Speaker 1:
15:40
Yeah. So that, that was my next question. So, you know, it's, you know, you invested in hello package early on and had been very instrumental in helping us, you know, come and really spend time and think through, uh, you know, we focused on the carrier experience as well as the resident and the apartment owner staff, uh, because we wanted to make sure that the carriers were in and out of the property quickly. Uh, because, you know, the big trucks and all that stuff than me becomes fairly cumbersome at some point. Um, you know, they've got their cards and you know, it's, they can become quickly part of the problem if you're not careful, uh, where they block up a rooms and, and also can't get in. You know, they're only open 30% of the time at the office, so they got to get on the property you're illegally to without tailgating or breaking in somehow.
Speaker 1:
16:28
So, but why did you invest in Hila practice? Cause you know, their walkers had been around a long time. I've been around over a hundred years themselves, you know, and the industrial situations and then recently, you know, in schools of course, and that are, you know, recently adapted to last five years or so to, you know, apartment clinics, which makes sense, right? You open up and stuck a package in and close it and let feels good, you know. So why did you invest in Hylo package? Uh, when, you know, Fedex knows a whole heck of a lot about lockers. They've got lots of them around the world. So why did you decide to work Jim?
Speaker 2:
17:03
Uh, uh, beside, uh, you are resolved expertise and salesman ship. Uh, when I met you, uh, I thought that, uh, uh, that this was a much needed, uh, service and uh, immediately thought it made a, it made a lot of sense. I can tell you up front, I've never been a real fan of the walkers system. Uh, perhaps they've worked in some situations, but, uh, I just see them as a static, uh, type, uh, operation, uh, or uh, or har piece of hardware that, uh, cannot be expanded. There's only so many, uh, the zoning, so many, uh, uh, Walker's within these, within these larger, uh, structures and a, when you fill them up, what do you do next? And after spending some time and Atlanta with you, uh, uh, I thought that the concept that you were developing provided a smart, uh, you know, software driven solution, uh, to, uh, to develop, you know, to deliver packages to multifamily, uh, apartment complex.
Speaker 2:
18:32
Uh, you know, I had passed witnesses problem firsthand. Uh, uh, true. Uh, my son's living in a apartment complexes, uh, their friends, those kinds of, those kinds of things. And knew it was a, was a, a basic car where packages were lost, misplaced, uh, and uh, uh, you know, it just a, and I had witnessed some I've self, but being in these places with a, in the rental offices with packages just spread out all over the place. One non professionally, but too distracting rental staff from doing their job of, uh, of, of running apartments. So, uh, and then if you understand, just as we've talked about already here, that the, there's going to be ever increasing volume, uh, to, uh, uh, to customers, uh, at home through ecommerce that, uh, uh, this, this was, uh, this was just a really a, a natural and, and I thought, uh, the, again, the, the, uh, software approach, the, the systems approach that you were taking with use of machine learning, artificial intelligence is absolutely the way to go.
Speaker 2:
19:51
And I wanted to be a, I wanted to be a part of that. Um, so, uh, that's, uh, you know, again, after spending some time with you and, uh, others, uh, of your team, uh, that's, uh, that's why I, I wanted to invest. I'm really, as I said before, I'm not bullish on, on lockers. I think they're going to be blown away, uh, by volume. They take up more space than, than our system. And, um, uh, it's just, uh, in, in my mind, it just doesn't make sense. Beside that hello package, our room can process, we, we can process returns for customers. Uh, we can pick up outbound packages faster and we're more convenient. So it all kind of, it all kind of comes together, uh, for me. And then since that time, over the last couple of years, uh, uh, with the, with the great work that you continue to do, the, you're brought on some really, really smart technologists, uh, and, uh, uh, they've made tremendous improvements, continue to make improvements every day as a different challenges, uh, come up. So I'm a, I'm happy with the investment that I've made and I have a hundred percent confidence that we're going to grow this thing. Uh, uh, uh, to, to a fairly large company down the road.
Speaker 1:
21:21
Okay. Yeah. I mean, you know, we, um, we see the world a little different, right? Get through the software lens because we are a software company first and we've building a platform what they call platform as a service where we can tie everybody together, all these, you know, there's a lot of players in this world, a lot of the carriers and a lot of the backend systems. So the Department of communities as well as the residents and the staff. And you tell that together and you make this logistic software that actually speeds everything up because the room actually ends up being not a storage room to just help people think of it. A locker, I put something in a store it until I'm ready for it. And then a president comes, gets it and we think of it more like a carrier deck so that things land and they take off, they land and they take off.
Speaker 1:
22:04
And we're really trying to follow the line of the carriers, which would be ups and Fedex particularly in certainly now Amazon. And think of this more as a software logistics problem, uh, that if you can integrate everything and you can be talking to each other and seeing it ahead of time, preemptive and getting the information flow and then actually clear in that room out through residents and, or maybe a third party service to get that stuff in the apartments, the landing deck or the room is like a carrier deck. You're just landing planes on and off of that thing you're trying to do sortings and getting the packages moving. And so that's, you know, the carriers figured that out a long time ago. It's really software driven. The brain of the whole operation is that software because without that software you wouldn't have anything to trucks and warehouses don't mean anything.
Speaker 1:
22:48
No. You know, the, the carriers, they just be running into each other. So that's kind of our approach. We didn't actually, you know, we, we, you know, we, Fedex has their version of that and when ups has Orion, the software and you know, is really the brains of, it's really almost a software company. You think of it, and then you have all the technology, you know, the hardware around it. That's kind of how we think of it. So with that in mind, the, so Amazon, you know, there and people being ushered in your perspective and Amazon, you know, are they retailer they carry or are they both, are they, you know, so, so you know, they also were offering a packaging solution, which is a locker based solution and uh, we've heard different things, but how do you think about Amazon as a, as a carrier or a supplier to this logistics supply chain as opposed to just a retailer and you know, um, certainly Fred Smith is voiced opinions about Amazon quite a bit and I was just curious what yours are.
Speaker 2:
23:45
Well, look, think Amazon will continue to deliver their own packages, uh, uh, to, uh, two more facilities from more societal facilities in larger towns are just cities like Atlanta, uh, using Uber, like, uh, uh, type, uh, driver model. Uh, I mean not only right, I'm sorry. And what the meaning of the economy. People, you know, just so they call him Dan. Yeah, I worked with, Oh yeah, I mean, uh, uh, right now they use independent, a lot of independent drivers. I call them Uber, like a that can come in and work three hours or four hours delivered, 20 stops, 30 stops or whatever they might want to out of their cars with no uniforms, uh, and little training and that kind of thing. And, but I think that that's going to continue. That's going to continue. I do not believe that, uh, that Amazon will invest in a total network of up a line haul and, and delivery operation.
Speaker 2:
24:57
I just think the, uh, the, the investment is uh, uh, is, is too great and it would take them a long time to build a density that they would need to compete with Fedex and ups. However, they still, uh, will, uh, in my mind, again in my mind, make their own deliveries, uh, in, you know, as, as density bills, uh, in these cities. I really believe that they'll build, build out distribution centers that allow that kind of APP, that kind of activity. So there are definitely going to be competing on, on that end. There are costs on a, and again in my mind, uh, for a delivery, uh, is probably higher in Fedex and ups, but, uh, I still don't believe that, uh, that, that they would enter into any kind of a delivery only agreement, uh, with, uh, uh, with Fedex or ups. I could be wrong. They had done it with the post office is delivering on Sunday. Uh, don't know, uh, how that's working out, uh, for the, for the postal service. But that is a delivery only, uh, only play. So, uh, again, uh, I think, uh, that's, uh, that's gonna be, that's gonna be their focus, but I don't see them again as a, as a full, a small package delivery play for the long term. Yeah. Yeah. I mean, even though they're building up that airport and all that stuff, the uh, you, I mean, you know,
Speaker 1:
26:44
they just have so much volume, I guess the same thing. I guess they could third party that out to someone, other people and getting that business. But we should, you see what happens there. And so what about the demand economy? Any kind of alluded to this. So you may have some more to add to it, but what about the demand economy carriers like shipped and live and Uber and those people, I mean they, you know, they can deliver, you know, ship bought was bought by target and they deliver straight from target. Right. So, um, you know, you don't have is, you know, it's not e commerce per se, I guess it is a electronic commerce, but effectively you're ordering from the store and the store is coming to you instead of you go into the store.
Speaker 2:
27:26
Yeah, I think ring the store team. Yeah. I think that's all of the same note. Jim. Uh, uh, this is a last mile delivery play from store distribution center. Uh, just like, uh, Amazon is doing, uh, with their own model, a ship for target and, and, and others are, uh, you know, they're going out and trying to buy that, buy that capability by that capacity, uh, to, to make their own, uh, to make dorm delivery. So I, if, if they can, uh, if they can manage, uh, these type operations and deliver their own packages again from really destination facilities last mile delivery, I think we should expect that that would continue, which means, uh, are, are how old package, uh, rooms will be, uh, will be, uh, uh, challenged by more and more drivers. Uh, as more and more of these, uh, of these retailers start to deliver their last mile themselves, which, which I see that's a challenge. But that's a good challenge. Again. So again, we have, we have the software in place that allows us to adapt, uh, to, uh, more and more carriers coming to, uh, uh, coming to our, uh, uh, ll package room. And I think we've seen that already. Uh, yeah, we're seeing that a lot because you know, you have a one hour delivery for some of these folks, like give your, or you get in an hour, right? So what happens, we call it hot pizza. Yeah.
Speaker 1:
29:05
If people order, it'd be, have a big community and you have a thousand residents or whatever it is. If people order multiple times during the day of different people are in, you'll have multiple hot pizza, so to speak, coming cause they have to come within an hour. So then they go back, they come again, they come again, they come again. But what ends up happening is you could have many, many, many deliveries in a day. It's not just a,
Speaker 2:
29:29
so this isn't gonna go away. Uh, that's the, that's gonna continue and ask their algorithms, improve that there'll be more efficient. Now, when I mean by that is, yeah, you know, not every target store for instance, or every Walmart store is going to have every better product that's on that, uh, on their, uh, website. And, uh, you know, what did they do when someone orders something that's not there and it's got to come from a DC or whatever for delivering in a day the next day or two days. However, they will understand patterns by different cities, areas, regions, uh, and uh, and, and, and you know, through, uh, uh, through great merchandising, aided by these software tools, they will, uh, I think, uh, be able to provide the, the, the right product for those that are ordering it in certain, in certain areas. So I again, I mean to answer your question, I just expect these, if you want to call them a on demand, uh, carriers, uh, to proliferate as more and more of these large retailers try to try to deliver their last mile.
Speaker 2:
30:48
Yeah. So art for premise, you know, on this hello package product was to, to really think about the apartment owners and it's really hard for people to get their mind around this, you know, the apartment owners many times. But to really think about the fact that you're actually in the supply chain, you're like an end point destination of the supply chain. And you know, you're really, you want to think of yourself in the apartment business, you clear land, you build apartments, but somehow you got into the supply chain. Well, if you believe that, then what you really want to be is an intelligent automated software driven, integrated part of that supply chain. Because if you've got to deal with it and you can't figure out how to get out of it, meaning you, your residence want their stuff at home, they don't want to go to the office and get it or stop somewhere on the way home.
Speaker 2:
31:38
Maybe they don't have a car, they take public transportation, but you want to delight the resident so they get their stuff at home while you're in that business. That's part of your business. And then especially if you want to offer the ability to do outbound returns, somebody sells on Ebay or if somebody works out of their home, like their sales rep and they want to ship stuff. So if you're doing, you know, logistics and reverse logistics as it were, then you want to be really, really smart about it and you, the last thing you want to do is get your staff sucked up in it so they can't lease apartments. That would be the worst of all worlds. And they want to be leasing sign leases, not handling brown boxes. So yeah, exactly. And I think you've got to get that look. I, I don't think there can be, uh, an important apartment owner today that doesn't understand that this volume is just building more and more and that they've got to have a smart solution to the analysts. They are getting blows volume. It's volume of carriers,
Speaker 1:
32:40
you know, carries alone is a big logistics issue, but actually have security concerns. You've got to get them, you know, you're only opening the office 30% of the time roughly. So you have another 60 to 70% of the time we're there. You're, you're not open, but they got to get in, they're going to get adjudicated, they get to get authenticated, they got to get on the property, they gotta you gotta have a tracking of all that. Then you've got the packages coming in and it's not just volume today. It's also size and weight because people were everything. You know, Wayfair, companies like Wayfair, the sell furniture, people who are all their staples or canned goods and all that, all this stuff, they get once a month. So I'd go into Costco or sams, they just getting Oregon now actually you can order it from Costco and Sam's, but he's coming this big box.
Speaker 1:
33:24
So you get, you know, get all these residents. We have thousands of residents and they're all starting to get all this stuff and it's bigger. It's only volume. It's large and it's heavy. Doesn't fit in a locker. So what do you do? Right? I mean you, all of a sudden you're like, in this supply chain, stuff's coming, all these characters are coming and now people want to do outbound and you're like, oh my gosh, what do I do? So that's where software has to take over. It's kind of like canned brainpower. And if you don't, if you don't have that, then you're really at a loss. I mean, at some point it just Brex, it's too much. It's too many. It's too confusing that we call it complexity and all, you know, all your residents want is they, they really want, they want convenience and speed.
Speaker 1:
34:06
That's really what they want. That's what Jeff Bezos has spent a lot of money on. Its convenience and speed. So would that, uh, what, uh, you know, in wrapping it up, anything else you want to communicate? Yeah, I mean, well I mean, you know, it's one of those things where, you know, it's, it's, you know, everything that looks like futuristic or whatever. At some level you start looking back on it, you think, well that was common sense, right? Cause it at some point you got to figure out what to do with this stuff and you can't, you know, you got to think about the problem differently. Um, and that's kind of what we tried to do and what we are trying to do. But is there anything else that, uh, you want to communicate? You have a interesting, you know, you're still involved in logistics. Yeah.
Speaker 1:
34:52
Chairman is Snyder and you know, I mean, you know, I, I mean, I think we've, we've, we've talked pretty thoroughly about all of this, but I again, see commerce growth is gonna Continue, uh, for, uh, the foreseeable future as far as I'm concerned. Uh, again, only 10% of retail is, is, is a solo true, uh, that meeting now and, and I, it, it's just going to continue to, to grow at double digits every year. Uh, uh, delivery options, uh, are critical. And, uh, uh, you know, again, we've talked why rental officers are not the way to go, that there has to be a place that, uh, a myriad of drivers 10 to 15 a day can come in there
Speaker 2:
35:38
and, uh, deliver, deliver packages, notify, uh, the, uh, uh, the residents that their packages are there, said that they can come in and pick them up. There's huge, uh, uh, changes in, in, in volume as you go through the year. There's certain peaks through the season, obviously the rising and, uh, after Thanksgiving through the sort of the Christmas holiday, how, in, how in the world can you put enough lockers in? Uh, to plan a, to plan for that, whereas our racks and our, and our shelving, uh, are easily expandable to accommodate, uh, fat kind of volume of fluctuations. Uh, so receiving packages is going to be more and more of a challenge over the next several years. I think we understand that. I think your system is designed to handle it. And, uh, uh, I, I think apartment owners have, have got to be an understanding. And, you know, even beyond that, Jim, we're going to see a, and you've already, uh, scene work that is being done by drones.
Speaker 2:
36:52
Uh, uh, Fedex is, uh, is, is, is, uh, testing of robot, uh, you know, how, how are they going to do that? How are we going to do that? Would, would, would it be possible to, for robots to be delivering two apartment buildings? Don't know. But, uh, uh, I, I think with our positioning, if that is the case, we just might be able to accommodate it. So, uh, uh, it's fascinating, uh, part of our culture, uh, in, in, in this country and really around the world now. And, uh, I just love the positioning of a whole package, a temp where I think we've got the right system, the right product, uh, to, uh, to handle, uh, this phenomena, uh, and a in a phenomena that's going to just continue, uh, to grow exponentially. So I, I,
Speaker 1:
37:48
yeah, no, that's good. I'm glad you brought up the drones to, and, uh, I'm glad you brought up the drones in the, in the robot and the, well, the rooms, the robots and you know, and I can't, um, uh, I talk to her there for a second, but I can't let you talk without also just getting you to comment on, um, you know, this whole idea cause you know, FedEx is their testing robotics now and you can go online and take a look at the stuff they're doing. It's pretty interesting. And, uh, you know, drones, of course everybody's poking around that and nobody knows exactly how it's going to work. Um, but the one that, uh, is interesting for sure is the whole driverless vehicle on delivery. Right. Um, you know, you'd be driven around by Uber, but, you know, getting a package that way, you know, where it comes from. Here comes, um, Pete, do you have any, um, any thoughts on that? I mean, cause you've seen a law, you have the truck speeding, speaking, driverless, you know, going down the road. Um, what, what's your thought on that? Cause that, you know, try to think of as core to your life.
Speaker 2:
38:50
Yeah, I think it's gonna happen. Uh, but I think it's out there for awhile and because of a of regulation, right? Uh, what, yeah, for the long haul I really see it happening. Yeah. I really see it happening over the road first. Uh, uh, but, uh, I, I still think, you know, as you may know, chairman of Schneider National Corporation, but second largest truckload carrier in the country. Yeah. Uh, and you know, obviously we understand what's going on in that space, the technology in that space. But I, I feel that, uh, it's still going to be a few years down the road before this becomes a regular part, uh, of the, uh, of the operation. Yeah. It's, it's in a, in, uh, this technology is critical to the industry because it's one of the huge challenges in this industry are drivers, uh, especially over the road drivers that don't get to go home every night.
Speaker 2:
39:55
But that, that slows down to a delivery drivers, uh, as well that with virtual, virtually no one employment, uh, there's other options for people to go to work, whether that be in the construction industry or, uh, or programming, uh, systems or whatever that makes, whatever that may be. Uh, so I, I, I, I think the technology is going to keep getting refined, but I think it's going to be several years before you see a FedEx package man being dispatched from the local center, going out to make 120 stops today without a driver. I think that'll be a while down the road. Yeah, no, I hear Ya.
Speaker 1:
40:44
Yeah. But it's something to pay attention to. And you know, the, the thing you know, that we built here in closing, you know, is, uh, you know what, what we built was really deliberately put in place the team, uh, both investors, advisors in our, our team actually in the building of carriers on the three legged stool carriers, which would be you people from ups. And we really want to focus on the apartment side, getting people from the industry to help us think this through. And we did that with investors and advisors as well and inside. And then thirdly is really technology because a lot of tech companies think they know an industry and they get technologist around. They actually don't know the industry. So we saw not only as the apartment being part of it, but also logistics. Cause we really do think apartment owners are in the logistics business.
Speaker 1:
41:38
And that's, you know, that's all. We were really excited to have you join the team couple of years ago. So, um, anyway, uh, yeah. Yeah, it's been my pleasure. I've really enjoyed the interaction with you and you came and, uh, uh, again, um, uh, very bullish on the work that we're doing. Work that, yeah, the thing is, sorry, go ahead. Let me, let me look. No, no, I'm, I'm, I'm, I'm done. Okay. So, so yeah, I was just gonna say that, you know, people, when they look at something, they think it's a picture instead of it's a movie, right? So this, we really do think this is just getting warmed up. And so the people at the Georgia Tech Supply Chain Logistics Institute, uh, here in Atlanta, the one of the top innovators in the country, you know, we're in the first inning of the ballgame. And you know, I think of it like the iPhone one, you know, we're on the iPhone 10, which is effectively like the 13 or something cause it's been a much assets, but you know, people think it's steady state right now.
Speaker 1:
42:38
And I think we're just getting started on all this. It's going to become much larger, much more much everything. And I, you know, it's not a parabolic curve won't go up forever, but at the same time, you know, there is a lot of, there was a lot more to do in terms of just retail, forget everything else. And um, any short come up people shipping stuff, back order 10 pair of shoes returned nine, you know, then you start talking about reverse logistics. So it's a big issue and a big issue for apartment owners. So, uh, again, thank you. I've been talking to Dan Sullivan who is founder and CEO of Fedex ground, uh, for 10 years and uh, now, uh, currently chairman of Snyder national, which is a very large, um, uh, trucking company and um, and he's an investor advisor here at packaged solutions makers of hello package and Dan, thanks a lot for your time and I really appreciate it and uh, we will talk to you again I'm sure really, really soon. Okay, Jim, thank you very much. It's great talking with you as well.
Speaker 3:
43:44
Bye Bye. Bye Jim.
Introduction - Dan Sullivan.
What is the history of FedEx Ground? How did everything get started and what made you think you could compete effectively with UPS?
What do you think motivated FedEx to recently go to seven-day per week delivery?
Where do you think the last mile logistics business is going?
Why did you invest in HelloPackage? What problem do you think it solves over the package lockers? (FedEx knows a lot about package lockers)
What role does Amazon play in that future? How should apartment owners think about picking Amazon as a package solution?
What role do demand economy carriers like Shipt, Deliv, Uber, etc. play in the logistics business?
What else would you like to communicate about the future of the carrier/logistics business?
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