1 00:00:03,960 --> 00:00:07,500 Jennifer Duke: Welcome to the Fear and Greed Business Interview. I'm Jennifer Duke. 2 00:00:08,010 --> 00:00:10,950 Jennifer Duke: The e-commerce boom has created a surge in demand and 3 00:00:10,950 --> 00:00:14,609 Jennifer Duke: competition in shipping and delivery. And Australia Post is baffling 4 00:00:14,610 --> 00:00:17,968 Jennifer Duke: it out against global giants like FedEx. FedEx has become 5 00:00:17,969 --> 00:00:20,669 Jennifer Duke: a much more common site on Australian streets in recent 6 00:00:20,670 --> 00:00:25,439 Jennifer Duke: years following the acquisition of transport company, TNT Express. FedEx 7 00:00:25,440 --> 00:00:28,740 Jennifer Duke: is a fascinating business and the logistics involved are mind-boggling. 8 00:00:29,130 --> 00:00:32,429 Jennifer Duke: Peter Langley is the Regional Vice President at FedEx. Peter, 9 00:00:32,429 --> 00:00:33,479 Jennifer Duke: welcome to Fear and Greed. 10 00:00:34,019 --> 00:00:35,580 Peter Langley: Thank you very much. Nice to be here. 11 00:00:36,900 --> 00:00:40,200 Jennifer Duke: So Peter, can you give me a bit of a potted history of FedEx in Australia? 12 00:00:41,100 --> 00:00:45,059 Peter Langley: Yeah. Well, as you've mentioned, the TNT business, which started 13 00:00:45,059 --> 00:00:49,320 Peter Langley: over 70 years ago, we had a very strong domestic 14 00:00:49,320 --> 00:00:54,150 Peter Langley: footprint and we were venturing into the international market, but 15 00:00:54,210 --> 00:00:58,200 Peter Langley: FedEx took over the business about six years ago, and 16 00:00:58,200 --> 00:01:04,679 Peter Langley: we've been able to expand the international coverage now across 17 00:01:04,679 --> 00:01:08,969 Peter Langley: 220 countries. But we have added that to the domestic network, 18 00:01:08,969 --> 00:01:12,569 Peter Langley: so now we've got a completely integrated international and domestic 19 00:01:12,569 --> 00:01:17,910 Peter Langley: network specialising also in Trans-Tasman. So very good offering for 20 00:01:17,910 --> 00:01:19,830 Peter Langley: our customers to their customers. 21 00:01:20,700 --> 00:01:23,639 Jennifer Duke: So we all love some numbers, so how many packages 22 00:01:23,639 --> 00:01:26,099 Jennifer Duke: does FedEx deliver in Australia and how has that changed 23 00:01:26,099 --> 00:01:26,700 Jennifer Duke: over time? 24 00:01:28,049 --> 00:01:32,220 Peter Langley: Difficult to talk about the complete number of packages. We've 25 00:01:32,220 --> 00:01:35,310 Peter Langley: got 5,000 team members here with two and a half 26 00:01:35,310 --> 00:01:40,799 Peter Langley: thousand vehicles. And we've seen a consistent growth across the business, 27 00:01:41,340 --> 00:01:46,139 Peter Langley: especially through the pandemic where e-commerce grew. It's come back 28 00:01:46,139 --> 00:01:48,719 Peter Langley: a little bit from where its heights were through the 29 00:01:48,719 --> 00:01:51,480 Peter Langley: middle of the pandemic as people have gone back to 30 00:01:51,480 --> 00:01:54,960 Peter Langley: work in bricks and mortar. But we've been able to 31 00:01:55,020 --> 00:01:56,550 Peter Langley: continue the growth year-on-year. 32 00:01:58,200 --> 00:02:00,929 Jennifer Duke: And I hear a lot that that last mile part 33 00:02:00,929 --> 00:02:03,179 Jennifer Duke: is the hardest stage of the delivery process. Is that 34 00:02:03,179 --> 00:02:03,960 Jennifer Duke: still the case? 35 00:02:04,889 --> 00:02:09,480 Peter Langley: Yeah. It still is the case because like with the e-tailers, 36 00:02:10,320 --> 00:02:13,560 Peter Langley: talent's been one of the issues, just getting enough people 37 00:02:13,560 --> 00:02:17,880 Peter Langley: to handle the packages and drive the vehicle. So we're 38 00:02:17,880 --> 00:02:22,288 Peter Langley: continuing to do that, although those labour issues have alleviated 39 00:02:22,288 --> 00:02:27,600 Peter Langley: slightly in the recent six months or so. So we're all, 40 00:02:27,600 --> 00:02:31,500 Peter Langley: I think, struggling with talent, but the last mile and 41 00:02:31,500 --> 00:02:36,510 Peter Langley: the infrastructure around it with technology, making sure the tracking's there, 42 00:02:36,990 --> 00:02:39,810 Peter Langley: we keep investing in that and that helps us to 43 00:02:39,870 --> 00:02:43,620 Peter Langley: keep the end consumer informed of where their package is. 44 00:02:44,490 --> 00:02:46,530 Jennifer Duke: And I suppose a big part of that is using 45 00:02:46,530 --> 00:02:49,559 Jennifer Duke: the right type of technology. How much of the process 46 00:02:49,560 --> 00:02:52,770 Jennifer Duke: is currently automated? And then looking ahead a little bit, 47 00:02:52,889 --> 00:02:54,780 Jennifer Duke: what sorts of technology do you think we'll be seeing 48 00:02:54,780 --> 00:02:55,769 Jennifer Duke: more of in the future? 49 00:02:56,580 --> 00:03:01,800 Peter Langley: Yeah, so the technology, we invest heavily in automated sorters. 30 years 50 00:03:01,800 --> 00:03:04,230 Peter Langley: ago when I joined the industry, everything was done manually. 51 00:03:04,230 --> 00:03:07,800 Peter Langley: So reading where a package needed to go was all 52 00:03:07,800 --> 00:03:11,129 Peter Langley: done in that way. These days, the automated sorters we've 53 00:03:11,130 --> 00:03:14,189 Peter Langley: got make sure the packages are in the right place. 54 00:03:14,820 --> 00:03:20,760 Peter Langley: But we're investing in dynamic route optimization, so we are making 55 00:03:20,760 --> 00:03:24,000 Peter Langley: sure we can track where packages are going and to 56 00:03:24,000 --> 00:03:29,280 Peter Langley: give some idea to the end consumer about delivery windows 57 00:03:29,280 --> 00:03:33,630 Peter Langley: that is coming in the very near future. But we're 58 00:03:33,690 --> 00:03:37,710 Peter Langley: investing in new scanner technology, we've just rolled out 5, 59 00:03:37,710 --> 00:03:42,630 Peter Langley: 000 scanners across Australia and New Zealand with upgraded software. 60 00:03:42,690 --> 00:03:47,700 Peter Langley: So always looking to provide more up-to-date information to the end 61 00:03:47,700 --> 00:03:49,080 Peter Langley: consumers and the senders. 62 00:03:49,890 --> 00:03:51,720 Jennifer Duke: Stay with me, Peter, we'll be back in a minute. 63 00:03:53,940 --> 00:04:00,900 Jennifer Duke: I am speaking to Peter Langley, Regional Vice President at 64 00:04:00,900 --> 00:04:03,870 Jennifer Duke: FedEx. Who are your customers at the moment? Is it 65 00:04:03,870 --> 00:04:06,509 Jennifer Duke: mostly those large corporations or are we talking a growing 66 00:04:06,509 --> 00:04:07,890 Jennifer Duke: number of SMEs as well? 67 00:04:08,940 --> 00:04:13,560 Peter Langley: Exactly. We have many large customers, but the growth is in 68 00:04:13,800 --> 00:04:17,880 Peter Langley: the SME sector. The e-commerce boom has meant that a 69 00:04:17,880 --> 00:04:21,719 Peter Langley: lot of small and medium businesses are growing and growing 70 00:04:21,719 --> 00:04:24,960 Peter Langley: at a faster rate. And that's just because they can 71 00:04:25,110 --> 00:04:28,769 Peter Langley: more easily compete, so we are seeing quite some growth 72 00:04:28,770 --> 00:04:31,049 Peter Langley: in the small and medium enterprises. 73 00:04:31,769 --> 00:04:33,779 Jennifer Duke: Did you find that the pandemic led to a lot 74 00:04:33,779 --> 00:04:35,760 Jennifer Duke: of that growth as more people shifted online? 75 00:04:36,600 --> 00:04:39,419 Peter Langley: Yeah, it certainly did. And it made it easier for 76 00:04:39,420 --> 00:04:43,678 Peter Langley: us to deliver. And I thank all of our team 77 00:04:43,678 --> 00:04:47,969 Peter Langley: members who, whilst many of us were locked up at home, 78 00:04:48,330 --> 00:04:51,570 Peter Langley: we had frontline handlers and drivers who were delivering to 79 00:04:51,570 --> 00:04:55,890 Peter Langley: the community, making sure people could continue their lives, albeit 80 00:04:56,250 --> 00:04:59,699 Peter Langley: instead of shopping in bricks and mortar, they were shopping online. 81 00:04:59,700 --> 00:05:06,149 Peter Langley: So the whole industry saw a surge in demand and 82 00:05:06,150 --> 00:05:08,039 Peter Langley: services across the pandemic. 83 00:05:08,700 --> 00:05:10,740 Jennifer Duke: Definitely. I think everyone was very grateful to still get 84 00:05:10,740 --> 00:05:14,760 Jennifer Duke: things delivered during that period. And we've obviously seen Australia 85 00:05:14,760 --> 00:05:18,660 Jennifer Duke: Post recently increasing the prices for packages. Where are some 86 00:05:18,660 --> 00:05:21,630 Jennifer Duke: of the cost pressures in delivery businesses across the board? 87 00:05:21,630 --> 00:05:24,300 Jennifer Duke: Are we talking like labor, fuel? What sorts of things? 88 00:05:25,230 --> 00:05:29,430 Peter Langley: I think all of it, the price of infrastructure, steel, 89 00:05:29,490 --> 00:05:32,039 Peter Langley: all those things have also gone up. So building new 90 00:05:32,040 --> 00:05:36,269 Peter Langley: facilities is more expensive. But certainly, fuel has increased and 91 00:05:36,960 --> 00:05:40,020 Peter Langley: we have a floating mechanism for fuel. As fuel goes 92 00:05:40,020 --> 00:05:43,139 Peter Langley: up as an input, we just pass that onto the 93 00:05:43,139 --> 00:05:47,520 Peter Langley: shipping organizations and when it comes down, we reduce that 94 00:05:47,520 --> 00:05:51,690 Peter Langley: particular element. But labor, of course, there's more and more 95 00:05:51,690 --> 00:05:55,770 Peter Langley: pressure on labor and just general goods and services that 96 00:05:55,770 --> 00:05:57,839 Peter Langley: we need to run the business have also increased. So 97 00:05:57,839 --> 00:06:01,830 Peter Langley: I think the inflationary pressures are hitting everybody. And what 98 00:06:01,830 --> 00:06:04,770 Peter Langley: we try to do is invest in the technology so 99 00:06:04,770 --> 00:06:08,818 Peter Langley: that we can get operational efficiencies so that we can 100 00:06:09,150 --> 00:06:12,150 Peter Langley: make sure we're only passing on what we need. 101 00:06:12,719 --> 00:06:14,758 Jennifer Duke: And we often seem to find though that I think 102 00:06:14,759 --> 00:06:18,330 Jennifer Duke: customers in general are increasingly expecting free shipping and discounts 103 00:06:18,330 --> 00:06:21,480 Jennifer Duke: on shipping and things like that. How do you match 104 00:06:21,480 --> 00:06:24,060 Jennifer Duke: those costs in a way that suits consumer demand? 105 00:06:24,630 --> 00:06:27,719 Peter Langley: Yeah. Well, everyone's trying to do it more efficiently, so 106 00:06:27,719 --> 00:06:29,910 Peter Langley: I think that's what we try to do. I guess 107 00:06:30,779 --> 00:06:35,429 Peter Langley: the piece for us is, where's the value? And sometimes 108 00:06:35,549 --> 00:06:39,810 Peter Langley: paying less for shipping means that you've got longer transit 109 00:06:39,810 --> 00:06:45,029 Peter Langley: times and it's the reliability of the shipment. So we 110 00:06:45,029 --> 00:06:48,029 Peter Langley: focus on fastest and most reliable so that we can 111 00:06:48,029 --> 00:06:53,878 Peter Langley: have product to our customer's consumer and also let's say 112 00:06:53,879 --> 00:06:56,610 Peter Langley: into bricks and mortar, it's on the shelf so people 113 00:06:56,610 --> 00:07:00,930 Peter Langley: can buy it. So sometimes there's not as much value 114 00:07:00,990 --> 00:07:04,078 Peter Langley: in the proposition that says, " I'm going to go for 115 00:07:04,080 --> 00:07:07,889 Peter Langley: the cheapest pricing." And it ends up in a longer 116 00:07:07,889 --> 00:07:11,400 Peter Langley: transit time, but also the product is not available for 117 00:07:11,400 --> 00:07:16,470 Peter Langley: the consumer to have and that experience is not as wholesome. 118 00:07:16,470 --> 00:07:19,200 Peter Langley: So we do try to work through how do we 119 00:07:19,200 --> 00:07:23,130 Peter Langley: balance out that value to ensure we offer the best 120 00:07:23,130 --> 00:07:26,700 Peter Langley: value in terms of pricing and the services we offer. 121 00:07:27,240 --> 00:07:29,760 Jennifer Duke: Now, obviously part of that value is having smooth supply chains, 122 00:07:30,330 --> 00:07:33,180 Jennifer Duke: and I'm hearing that there's a lot happening with FedEx 123 00:07:33,180 --> 00:07:35,850 Jennifer Duke: Trans-Tasman lanes. Can you give me a bit of an 124 00:07:35,850 --> 00:07:37,800 Jennifer Duke: explanation about what you're doing in that space? 125 00:07:38,700 --> 00:07:43,440 Peter Langley: Yeah. We're seeing in Australia, Sydney was one of those 126 00:07:43,440 --> 00:07:48,390 Peter Langley: markets that was always important, but Melbourne, as the growth 127 00:07:48,629 --> 00:07:52,800 Peter Langley: accelerates down there, we're seeing a lot of warehousing in 128 00:07:52,800 --> 00:07:56,520 Peter Langley: the first and second cities. So Sydney and Melbourne. And then 129 00:07:56,730 --> 00:08:02,009 Peter Langley: for New Zealand, Auckland was always the focal point, but 130 00:08:02,009 --> 00:08:06,059 Peter Langley: we're seeing Christchurch becoming even more growth down there, like 131 00:08:06,059 --> 00:08:09,660 Peter Langley: with Melbourne in Australia. So the one and number two 132 00:08:09,660 --> 00:08:14,369 Peter Langley: cities, we've connected with 10 weekly flights. So we are 133 00:08:14,370 --> 00:08:19,889 Peter Langley: now giving next day services across the Tasman and we've had 134 00:08:19,889 --> 00:08:22,650 Peter Langley: a lot of interest and a lot of increase in 135 00:08:22,650 --> 00:08:27,420 Peter Langley: shipping because of those flights. And it enables not only e- 136 00:08:27,420 --> 00:08:34,050 Peter Langley: tailers, but agricultural companies, medical companies, many sectors with that 137 00:08:34,050 --> 00:08:39,629 Peter Langley: overnight connection from Auckland and Christchurch into Sydney, Melbourne and 138 00:08:39,630 --> 00:08:42,838 Peter Langley: Brisbane. That's a great service and we're seeing a lot 139 00:08:42,840 --> 00:08:43,710 Peter Langley: of uplift in demand. 140 00:08:43,710 --> 00:08:47,220 Jennifer Duke: It'll be really interesting to see how that develops over 141 00:08:47,220 --> 00:08:49,679 Jennifer Duke: time. Peter, thank you so much for talking to Fear 142 00:08:49,679 --> 00:08:50,160 Jennifer Duke: and Greed. 143 00:08:50,520 --> 00:08:51,090 Peter Langley: Thank you very much. 144 00:08:51,840 --> 00:08:54,420 Jennifer Duke: And that was Peter Langley, the Regional Vice President at 145 00:08:54,420 --> 00:08:57,569 Jennifer Duke: FedEx. This is the Fear and Greed Business Interview. Join 146 00:08:57,570 --> 00:08:59,760 Jennifer Duke: us every morning for the full episode of Fear and 147 00:08:59,760 --> 00:09:04,290 Jennifer Duke: Greed, Australia's best business podcast. I'm Jennifer Duke, Economics Correspondent 148 00:09:04,290 --> 00:09:06,660 Jennifer Duke: at Capital Brief, and filling in for Sean Aylmer. Have 149 00:09:06,660 --> 00:09:07,260 Jennifer Duke: a great day.