Despite all that, we increased our earnings and improved profit, and this is actually DRIVE working. And as we start to lap these headwinds, DRIVE progress will become even more visible in the numbers. And again, we think there’s a tremendous opportunity and the teams are working hard to capture that. I’ll just make a quick comment on the forecast and then I’ll turn it over to John. The demand environment remains uncertain and we are being prudent in our financial projections, given that environment. And once again, our ability to drive better results even in a lower demand environment is what’s really encouraging to me. Now the environment changes and we are more positive. Obviously, there’s significant leverage on that. So John, if you want to add anything to it?
John Dietrich: No, Raj, I think you’ve really captured it. All the significant headwinds that Express faced, yet they were able to turn a profit and the year-over-year improvement is exceptional. But that said, we’re going to be focusing on those markets. We’re going to be focusing on continuous improvement. We’re going to be focusing on the DRIVE initiatives to keep improving those margins. And on the guidance, yes, I think, Raj covered it. Thank you.
Operator: The next question will come from Amit Mehrotra with Deutsche Bank. Please go ahead.
Amit Mehrotra: Thanks, operator. Hi, everyone. Congrats on the quarter. John, I guess wondering on the Ground performance, obviously, it’s incredibly strong. I’m just wondering if you would — is there anything to ring-fence there that you would consider kind of onetime due to the volume diversion opportunity? I’m just looking at that plus 4 in August and wondering is there any cadence shift throughout the month and some of that volume went back. And I guess just clarifying on Express, I think, it sounds like there was a $150 million step-up sequentially in Express related to the incentive comp. Can you just confirm that? I can get it from the Q, but I was just wondering that maybe that may explain why the decremental sequentially were so high. And I guess that moderates as we go on because that’s now in the cost structure. If you could just clarify that.
John Dietrich: I think what I said was $100 million incremental to our last report, from the last time we reported on it. So that’s that piece of it. With regard to Ground, look, as I mentioned just a short while ago, we think the improvement is going to continue on a year-over-year basis in terms of ring-fencing anything, as Brie talked about, we’re going to be looking to keep that incremental business and, in fact, have terms that require we are very discerning on the customers we took on and have agreements in place with those customers. And on the Freight side as well with Yellow that capacity at least for now has come out of the market and Freight is going to be taking advantage of those additional volumes. But I mean just getting back to Ground for a moment.
We’re expecting continued year-over-year improvement and no ring-fence to identify. With regard to Express, we’re going to be focusing on the margin expansion. I’m not exactly sure on your question from perspective otherwise. But we’re going to be focused on that margin expansion and continuing to grow and leverage the opportunities we have at Express.
Operator: The next question will come from Bascome Majors with Susquehanna. Please go ahead.
Bascome Majors: This spring, your primary competitor talked about potentially launching some dynamic pricing products in the parcel space, which we haven’t seen a lot of from the larger carriers before. Can you talk a little bit about where and if FedEx uses dynamic pricing in its US domestic products at this point? And has that evolved in the competitive landscape as a tool for market share and network efficiencies? Thank you.
Brie Carere: Sure. Great question. We’re actually really pleased with the progress that we’re making. Our pricing team along with DataWorks are building a great platform to be able to dynamic — to price more dynamically. Where we are currently using this capability now is we have made our peak surcharges around the world more dynamic. We have a great spot pricing capability that we’re using in our airfreight products that we are using to kind of match capacity to the market as well as we’re starting to use that domestically in some backhauling. We’ve got a long road map of things that we’re going to bring to market that we’re very excited about to drive revenue quality. But I have to — I really don’t want to share much more than what’s already visible in market because I certainly don’t want to provide any competitive intelligence that I don’t need to.
Operator: The next question will come from David Vernon with Bernstein. Please go ahead.
David Vernon: Hey, good evening, and thanks for making the time, Mickey. Congratulations, John. Welcome to the circus. Quick question for you on the cost per piece in the Ground segment. The 10.30 sort of sequentially is a big surprise. How should we feel about that number in absolute terms as we look at the rest of the year? Should we be kind of running at that 10.25, 10.35 range? Are there additional things that are going to be popping in and out of that on a cost per piece basis? I’m just trying to get a sense for kind of where we should be expecting the cost structure for the full year. And if you could talk a little bit more about the drivers in this quarter. You mentioned line haul. I’m just wondering if you renegotiated a bunch of line haul rates in a down truck market, that kind of thing, which is going to — which should be sticky for the rest of the year. Thank you.
John Dietrich: So I’ll take that in reverse order. On the measures taking, yes, it’s across the board with DRIVE, line haul and all the things we mentioned in our prepared remarks. And with regard to the rate environment, we’re expecting it to remain consistent so that’s factored into our forecast. But we will continue to update as time goes on. Again, line haul, dock productivity, higher wage and settlement rates that we’re focused on, as Raj touched on, and just across the board focused on productivity. And that’s true at Ground and that’s going to be true at Express and with Freight as well. And I mentioned first and last mile in my remarks.
Operator: The next question will come from Brandon Oglenski with Barclays. Please go ahead.
Eric Morgan: Hi. Good evening. This is Eric Morgan on for Brandon. Thanks for taking my question and congrats to Mickey and welcome to John. I wanted to ask on Network 2.0. Raj, you mentioned you’re continually learning and tailoring the network as you go through this process. So can you give us some color on what has gone right and wrong so far with co-locating the Express and Ground terminals? And on the employee service provider decisions, I know it’s market by market, but maybe could you give us some insight into what variables you’re considering when making those decisions? Just trying to better understand the strategy there and how confident you are in execution.
Raj Subramaniam: Well, thank you for the question. Things are going quite well as we feel we are on track to complete our Network 2.0 by our commitment of fiscal year ’27. As you know, we have announced and/or implemented optimization changes in Alaska, Hawaii, Canada as well as several other locations in the Lower 48. And we are definitely learning a lot in this process. I mean, we have technology, we have facilities, we have people. And our principle is pretty straightforward, which is going to be data-driven and it’s going to follow the PSP philosophy. And again, it’s important to note that we will continue to use both the courier and the service provider model for pickup and delivery operations tailored to the characteristics of each market. So, so far, so good. And again, we are putting all this in place as we move forward. And post peak, we’ll announce the next wave of rollout of Network 2.0.
Operator: The next question will come from Helane Becker with TD Cowen. Please go ahead.
Helane Becker: Thanks very much, operator. Mickey, congratulations. John, welcome on board. And thanks for the time, team. So my number one question is the UAW is doing these targeted strikes. And I know automotive and automotive parts is a big part of your vertical, one of your big verticals. I’m kind of wondering how you’re thinking about that, the impact in the current quarter, how you’re thinking about mitigating any impact and so on, if you can help out there. Thanks.