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Dr. Udo Lange is president and chief executive officer of Memphis-based FedEx Logistics, an integrated global logistics organization providing a wide variety of specialty supply chain, air and ocean cargo, trade, customs brokerage, and managed transportation solutions. In this role, Lange is responsible for the leadership and strategic direction of FedEx Logistics.
Lange has more than 20 years of experience in the international trade industry, with expertise in global freight forwarding, customs brokerage and logistics. He joined FedEx in 2015, beginning his tenure with the company as the chief operations officer for FedEx Logistics and president and chief executive officer of FedEx Trade Networks, a company under FedEx Logistics. In those roles, Lange was responsible for overseeing all supply chain, global freight forwarding, customs brokerage operations, and engineering functions for FedEx Trade Networks, as well as for all of FedEx Logistics.
Prior to joining FedEx, Lange held executive leadership positions with leading international transportation providers, where he led successful operational excellence and corporate quality initiatives. Dr. Lange holds a doctorate in economic science from the University of Duisburg and a master’s degree in business administration and mechanical engineering from the University of Kaiserslautern.
David Maloney, Editorial Director, DC Velocity 00:00
Protests continue to slow truck traffic in the U.S.-Canadian border. What will it take for the Postal Service to turn a profit? And a conversation with FedEx Logistics president and CEO Udo Lange, who is a member of the White House Task Force on Supply Chain Disruptions. Pull up a chair and join us as the editors of DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at DC Velocity. Welcome.
Logistics Matters is sponsored by Hyster Company, a global manufacturer of forklifts, high-capacity lift trucks, and container-handling equipment. Operations rely on Hyster for everything from advanced power sources for material handling equipment to their industry-leading package of operator-assist technologies, Hyster Reaction. For more information, visit Hyster.com.
As usual, our DC Velocity senior editors Ben Ames and Victoria Kickham will be along to provide their insights into the top stories of this week, but to begin today: Udo Lange is the president and CEO of FedEx Logistics. He leads one of FedEx's most important business units, and also is currently a member of the White House Task Force on Supply Chain Disruptions. I spoke with him yesterday about the work of the task force, how the industry is coping with disruptions, and how FedEx Logistics is working to meet customer needs during these unprecedented times. Here's our conversation.
David Maloney, Editorial Director, DC Velocity 01:36
Welcome, Udo, to Logistics Matters.
Udo Lange, President and CEO, FedEx Logistics 01:38
Yeah, hi, David. Thank you so much. I'm really delighted to be on your podcast today.
David Maloney, Editorial Director, DC Velocity 01:44
FedEx, of course, is a very large corporation and has many different divisions. So how does FedEx Logistics fit into the FedEx structure and the offerings that you bring to the market?
Udo Lange, President and CEO, FedEx Logistics 01:55
Yeah, so if you think about our business, the space that we are covering is air freight forwarding, ocean freight forwarding, customs brokerage, and supply chain solutions. We have around about 20,000 employees in more than 31 countries and are really supporting, with that, the whole FedEx enterprise and our customers with specialty solutions around logistics.
David Maloney, Editorial Director, DC Velocity 02:26
Now, as part of that role, you, obviously, are an expert in that area, and that's one reason why you were selected to be part of the White House task force on disruptions. What's it like working with that group?
Udo Lange, President and CEO, FedEx Logistics 02:37
Yeah, I have to say I was really honored, first, of course, when the White House reached out to FedEx to be included as one of the key members in the White House Task Force on Supply Chain Disruption, and then when FedEx nominated me as a key representative of the company. And so I was I was part of the kickoff call with Vice President Harris and Secretary Buttigieg and John Porcari, several industry leaders, and union leaders as well. And I think the message there was very clear: That the congestion can really only be resolved in a joint effort. And if you think about the, the congestion in Los Angeles and Long Beach, I compare it with heart congestion that a heart patient has. So, think about the ports are like the heart of the economy for the United States, and now, suddenly, the heart is clogged. So, now what you really need to do is instead of everybody optimizing the individual areas, it's looking at a joint level and saying, What can we do together to improve here? And I think it's great to see that the public and private sectors have come forward and some of the results, if you take the full container fee that was not even implemented yet, but just announced, has already reduced the long-dwelling containers by 59%. By now, my understanding is, that we were one of the proponents to get sweeper ships in there, so that you can get empty containers out, so that you can basically, as part of your heart operation, so to say, free up all the more capacity, because it's empties and fulls which are blocking the container. Several ocean carriers have come to the table, and my understanding is it's more than 100,000 containers that have already, on the empty side been removed with sweeper ships. So—but of course, it's a massive challenge and that takes everybody involved, and you still need to work through the chassis shortage as well, and definitely you need to have more removals of empty and full containers, but I think everybody's very focused on that.
David Maloney, Editorial Director, DC Velocity 05:05
Yeah, you had mentioned a couple of the things that are being done, and, obviously, there's a lot that remains. We're making progress slowly but surely, but how long do you think this is going to last, and what do you think are the main things that the taskforce should focus on now?
Udo Lange, President and CEO, FedEx Logistics 05:19
So, I think, continue to work on the removal of the full containers, removal of the empty containers is critical; thinking about through—what is your, what is the whole idea around the chassis situation, because you still have a chassis shortage, and then from there on, when you have resolved these, I'm sure the next bottleneck will pop up, David, and then you need to focus on on that topic.
David Maloney, Editorial Director, DC Velocity 05:51
How long do you think things will take before we get back to the pre-pandemic conditions that we enjoyed in 2019?
Udo Lange, President and CEO, FedEx Logistics 05:58
So, if I've learned one thing during this pandemic, it's, I'm not making any predictions on when the pandemic is over and when the impact of pandemic is over, and so I think it's more about how do you work through? Because every variant has different impacts, and how do you work through it, and how do you adjust to the environment, and how do you address challenges at hand? I think that's the right leadership right now.
David Maloney, Editorial Director, DC Velocity 06:28
Fair enough on that question. Obviously, FedEx Logistics has been, along with everyone else, trying to navigate all of this, what have you been doing specifically for your customers to enable their supply chains to continue to flow?
Udo Lange, President and CEO, FedEx Logistics 06:42
Yeah, so let me give you examples on the on the air freight and the ocean freight, but even also on the supply chain side. So, the interesting on the ocean freight side, if you think about congestion is, it's on the port of origin, then long waiting times in Los Angeles-Long Beach, and it's no chassis availability, and then it's a trucker shortage as well. So, we have actually created the solution—and think think about, again, the congested heart, where you can also have a bypass as part of such a situation. So, use the Port Hunan in China and the Port Hueneme on the West Coast, and both of them have no dwell time or waiting time, so, check mark on that. Then, FedEx Freight is actually importing containers, 53-foot containers for their operation, and we use that, so check on the container side. And then FedEx Freight has ordered their own chassis that we use, so check on the chassis. And then Port Hueneme has been amazing to work with, so, you arrive, you unload the ship within 48 hours, and the truckers have zero wait time, so, we got our truckers really excited about this. So we created this very differentiated solution and are saving more than 20 days in transit time for our customers at a very competitive cost situation. On the air freight side, we're working very flexible with our with our customers, and we are redefining pricing solutions. We have air freight chartering programs. And of course, also think about it, we do all of this while we support humanity during Covid, so we have more than 200 PPE charters operated or orchestrated by FedEx Logistics, and we are now all the—part of the testing logistics, where we have the chartering of the planes, and then we have the supply chain operation, FedEx Logistics, who does the cross docking, and then our transportation management, ensuring deliveries. And then, think about our supply chain facilities across the world. Well, of course, heavy switch into e-commerce, and we are one of the leaders in fulfillment in the United States and are supporting our customers, of course, during this very strong e-commerce demand, but of course, also our B2B customers through contract logistics. So, we're really a critical link, and I'm very excited about what my whole team and everybody within FedEx Logistics has done, and a big thanks to all of our team members.
David Maloney, Editorial Director, DC Velocity 09:36
Yeah, it sounds like you're doing some terrific things there. I know in addition to that, you've also been working through a lot of digital innovation to improve the customer experience. What's involved with all of that?
Udo Lange, President and CEO, FedEx Logistics 09:47
Yeah, let me talk about that on the one hand from a FedEx enterprise perspective and then also go a little bit deeper on what we are doing in addition, also, at FedEx Logistics. So, on the enterprise—and if you hear our president and chief operating officer Raj Subramaniam and talk about it, it's just fascinating—so, we are leaning extremely strong into digital, and we've created a company called FedEx Dataworks. And in 2019, prior to the pandemic, FedEx set really out on a new chapter of our journey to innovate digitally and transform commerce with the power of data, and our objective is there to provide better visibility for us and our customers. And we created this company with a mission to leverage the data created by the FedEx network and apply capabilities like machine learning and decision science to make supply chains work smarter for everyone. And FedEx Dataworks takes, really, a platform-centric approach to create powerful applications, and by continuously building iterating, and exploring, we're able to develop products quicker with each repetition and make data work better for our customers in providing greater visibility and optimization across the supply chain. So, I think that's so excit[ing]. You're leaning very strongly into the data side. But then, we also launched FedEx Surround, and we launched this in collaboration with Microsoft, and FedEx Surround is a customer platform that enables new and proactive monitoring and intervention controls over the supply chains. So, from the millions of data points we get from packages across our network, we built FedEx Surround, which monitors the risk [to] packages along the delivery routes, such as weather disruptions or traffic delays, and this real-time information provides customers visibility to [the] state of their supply chain and allows them to proactively plan the remediation and alternatives that FedEx can help to execute to keep the shipment on track, so... . And what is really fascinating: We use this to support the Covid-19 vaccine transportation, and the reality of the Covid vaccines on our system was a five-times increase in daily shipments that required hands-on priority management. And typical priority shipments include items like other medical deliveries requiring cold storage or specialized industrial parts that keep plants from having to shut down, so, and this innovation now gets applied to other areas with high-value customers. So, that's, you see how heavy we are as FedEx leaning into data and digital connectivity, leaning in the digital space as front and center to FedEx and FedEx Logistics.
David Maloney, Editorial Director, DC Velocity 12:49
Well, as we've seen, having good data, as well as visibility into cargo is really important with all that we've experienced in the last couple years. We've been talking with Udo Lange, the president and CEO of FedEx Logistics. Thanks again for being with us today.
Udo Lange, President and CEO, FedEx Logistics 13:05
Thank you so much, David, for having us. Appreciate it.
David Maloney, Editorial Director, DC Velocity 13:09
Now let's take a look at some of the other supply chain news from the week. Victoria, you reported yesterday on the continuing protests and disruptions occurring at the U.S.- Canadian border. What's the latest there?
Victoria Kickham, Senior Editor, DC Velocity 13:21
Yeah, that's right, David. So, supply chain issues have been in the mainstream news once again recently, with what's happening across the U.S.-Canada border. Supply lines have been slowing there this week, especially in the Detroit area. As you noted, protests continue throughout Canada in the wake of Covid-19 vaccine mandates affecting truck drivers, which took effect in January. These are mandates that require workers who previously—who were previously exempt from the rules to now show proof of vaccination across the border, and that includes truckers. The rule for entering Canada took effect January 15, and the rule for entering the U.S. on January 22. I spoke with leaders at supply chain visibility platform FourKites about this issue, just to see how it's affecting cross-border shipments. And FourKites tracks things like on-time performance, shipment volumes, and wait times at the border for customers in a range of industries, and they regularly do this for all kinds of supply chain disruptions. So, the company's data shows that, showed changes in all of those metrics, both immediately after the mandates went into effect and in the week since. Essentially, they saw on-time performance and shipping volumes decline in the weeks the mandates took effect, as well as, they found longer wait times at the border. On-time delivery performance for U.S.-to-Canada shipments have since improved, but the data show declining rates for deliveries from Canada to the United States. And FourKites says that's likely due to continuing effects from the protests and the blockades that we see occurring across the country. Wait times from the U.S. to Canada we're trending downward by about 30% as of this past Monday, which was good news, but wait times from Canada to the U.S. were up by 20% or more compared to the previous week. As I mentioned, the situation was most acute in the Detroit/Windsor, Ontario, area where a major trade artery, the Ambassador Bridge, has been blocked, and that's a key trade route for the auto industry on both sides of the border, and there have been reports already, as many of our listeners have probably heard, of production lines being affected, with some of the major automakers shutting down plants and cutting back on shifts, because they can't get certain products and materials. I checked this morning, and as of early this morning, trucks still weren't getting through that bridge. Commercial traffic is being diverted to another bridge in the area, so things are still moving pretty slow.
David Maloney, Editorial Director, DC Velocity 15:44
Victoria is a situation notably worse than some of the other supply chain disruptions that we've been dealing with during the pandemic?
Victoria Kickham, Senior Editor, DC Velocity 15:51
Yeah, good question. I spoke to Glenn Koepke, who's a senior vice president at FourKites, and he characterizes this as one more in a long line of disruptions that business and the supply chain logistics industry has had to deal with the past two years. So, he essentially said it's really not much different from what they would see with the severe weather disruption or strike or similar issue. The difference seems to be, here, that people didn't expect the mandates and the reaction to have such a strong impact as early as they have. But companies are dealing with it now and figuring out how to reroute deliveries, especially if they're in the broader metro regions on either side of the Detroit-Windsor border. FourKites data show that other border crossings are not as affected, but there is concern that that could happen. The other issue here is that trade groups are weighing in and asking government and business leaders to take action to alleviate this problem. The Canadian Trucking Alliance has asked leaders to quickly find a way to end the blockades, in particular, I did see, I think it was yesterday or maybe this morning, that the city of Windsor is seeking an injunction to remove the demonstrators from the bridge, so we'll see how that plays out. An American trade group called the Owner-Operator Independent Drivers Association has asked leaders on both sides of the border to exempt truckers from the new mandates, saying that their status as essential workers and the fact that they work alone in their trucks, and primarily outdoors puts them at low risk for transmitting Covid-19. So, essentially, they're saying, you know, the same rules that have applied to truckers for the past two years should remain in place. So, not clear right now how all this will play out, but it looks like the supply chain can expect more cross-border delays, certainly in the near future, and maybe the weeks ahead.
David Maloney, Editorial Director, DC Velocity 17:34
Yeah, it seems that way. Thanks, Victoria.
Victoria Kickham, Senior Editor, DC Velocity 17:37
You're welcome.
David Maloney, Editorial Director, DC Velocity 17:38
And Ben, your wrote this week about how Congress might finally be taking steps to help the U.S. Postal Service start operating at a profit again. What more can you tell us?
Ben Ames, Senior News Editor, DC Velocity 17:49
Yeah, exactly. This has been one of those stories that's been playing out over many, many years. The most recent news is that we got the latest quarterly earnings results this week from the U.S. Postal Service and it's always interesting reading. They reveal a lot of trends and changes that are happening at the agency. But first of all, they also showed one thing that hasn't changed in a long time, and that's the bottom line, that the post office continues to lose money. For the quarter ending December 31, USPS lost 1.5 billion—that was measured—there are different accounting measures that they use, but we'll stick with the, what's called gap measures. And that 1.5-billion loss compares to a net income of 318 million for last year's quarter at the same time. But, looking at a year-to-year basis, that's about on par for the performance. It's usually in the red. USPS gave some reasons for the loss. For example, they said its costs rose last quarter. That was led by almost a 10% jump in transportation expenses. That's because of climbing rates for diesel fuel and jet fuel, and that leads to climbing unit costs per mile. At the same time, its revenue dropped, so you can tell that's a bad recipe. And USPS said, in fact, it would have dropped even more if they hadn't raised stamp prices again last year. The problem behind that is that there's a continuing migration from postal mail to electronic communications, and also transaction alternatives—so, in other words, email and direct-deposit checks, for example. And those things have been exacerbated, accelerated by the pandemic. At the same time, there's an e-commerce boom we've been reporting on for many months, and that's pushing more parcels than ever into the postal service network. But USPS makes a lot less money delivering packages than letters, so that's not a good trend for it. USPS did say that the pandemic-related surge of e-commerce we saw in 2021 is now abating as the economy recovers, but that just means that it's a slower rate of growth. It's still growing. And in fact, the service said that its shipping and packages volume is higher now, still, than pre-pandemic levels. It's complicated, though. At the same time, you know, the postmaster general, Louis DeJoy, has rolled out some controversial alternatives to try to make the service run more profitably. You know, some of those have drawn criticism. One of them was slowing delivery time for packages going longer distances. Another one is replacing the aging mail-truck fleet, primarily with gas-burning instead of electric cars. But under questioning, DeJoy has said that the USPS simply can't afford to do it any other way unless Congress steps up and increases their budget.
David Maloney, Editorial Director, DC Velocity 20:43
Well, Ben, those sound like big challenges. What can Congress do to help?
Ben Ames, Senior News Editor, DC Velocity 20:48
They really are big challenges, like we were talking about, you know, it's just simple math, you know, if your costs are rising, and your income'3s dropping, and for years, we hadn't seen Congress do anything at all to help. But, this week, the day after those results came out, we finally saw that begin to change. So, the House of Representatives passed a bill called the Postal Service Reform Act of 2022. Among other changes, that bill would repeal a requirement that the postal service has to prepay its future retirement health benefits. That's a little wonky, but it's a regulation that postal service leaders have long complained doesn't apply to private corporations, and it makes it really difficult for them to compete in the open market. So, going forward, the bill would have postal employees and retirees, instead, get their medical coverage through Medicare, and also a new program through the federal Office of Personnel Management. As well, on the income side, the bill could help increase revenue by allowing USPS to start generating extra income by providing, quote "certain non-postal products and services," through agreements with different states and regions. That, I believe, refers to banking and financial services, something that has long been suggested as a possible side business. So, the way that these things work in Washington, that House bill now heads to the U.S. Senate. Lawmakers are drafting a parallel bill there. If the Senate bill passes, then the two acts have to be combined through reconciliation, and then, finally, they would head to the White House for final approval. So, lots of steps, they're difficult to forecast, but, you know, there are two things that make it look possible. So, first, DeJoy, the postmaster general is in favor of it. In a statement before it passed, he called it long overdue legislation and said that if it passed the House, which it did, then he was hopeful that the Senate would also vote in a timely manner. And the second thing that makes it look good is that the bill passed the House with a vote of 340 to 92. And that shows really strong bipartisan support in a body that's pretty equally split between the parties. And that's a pretty amazing thing in Washington nowadays, given you know, the polarized debate that we see and prevents much productive discussion on a lot of other issues. So, a couple of reasons to be hopeful here.
David Maloney, Editorial Director, DC Velocity 23:13
Yeah, it sure is. It's almost a miracle, if you ask me, if you get Congress to do something so overwhelmingly. Let's hope it happens. Thanks, Ben.
Ben Ames, Senior News Editor, DC Velocity 23:22
Yep, yep, glad to do it.
David Maloney, Editorial Director, DC Velocity 23:24
We encourage listeners to go to DCVelocity.com for more on these and other supply chain stories and check out the podcast Notes section for some direct links on the topics that we discussed today. Thanks, Ben and Victoria, for sharing highlights from the news this week.
Ben Ames, Senior News Editor, DC Velocity 23:39
Happy to be here.
Victoria Kickham, Senior Editor, DC Velocity 23:40
Yeah, me too. Thanks.
David Maloney, Editorial Director, DC Velocity 23:42
And again, our thanks to Udo Lange of FedEx Logistics for being our guest today. We welcome your comments on this topic and our other stories. You can email us at podcast@dcvelocity.com.
We also encourage you to subscribe to Logistics Matters at your favorite podcast platform. Our new episodes are uploaded each Friday.
And speaking of subscribing, we encourage you to check out our 11-part limited podcast series from CSCMP's Supply Chain Quarterly on the Top 10 Supply Chain Threats. Search on your favorite podcast platform to listen to the episodes.
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We'll be back again next week with another edition of Logistics Matters, when we'll discuss best practices for developing secure supply chains. Be sure to join us. Until then, please stay safe and have a great week.
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